|
Interestingly I posted a thread expressing my frustration with the way things are going in these parts, and lack of desire to visit often. Say no more..! I mention this only to note that if any senate HCR buffs wonder "what are you still doing here?": I stated quite clearly that I wasn't posting a goodbye note, although I'm not likely to stick around on a regular basis. Indeed, I was explaining my personal reasons for being here less and less. This past year I have actually tended to avoid posting on DU (and when I don't post on a forum, I tend to avoid reading it), lest I actually stress myself out further. OK, so snark bait anticipated, on to the subject of this thread.
Most people took Econ 101, right? the section on the radical difference between how you figure market price between free market, price controlled market, demand controlled utility (inflexible demand), regulated and unregulated monopoly (oligopoly nearly counts as a monopoly but you won't hear Congress talk about that). This is really basic stuff. Heck, I didn't even get a good grade in Econ 101 but I remember my segment on the difference between a freely purchased good and a government mandated utility quite well.
Put it another way -- you have a company that sells widgets. Suddenly, you:
1. Allow demand to remain flexible below the profitable production price point, driving the cost of the widget up as it becomes a specialty item.
2. Allow supply to remain flexible below most users' price point, causing the market to attain equilibrium at a price point at which 25% of the marketplace is underserved.
3. Allow users to buy whatever type of widget they want, OR NOT, causing an additional marginal percentage of the "choice" (sought-after) market to not purchase the premium widget at the previous market price point. This drives other competitors to offer a range of options at a lower price point. On the other hand, if the entire market is skewed to offer a substandard product because of production conditions (like booking a comfortable airline flight) then this does not solve the problem of 25-50% being underserved, merely ensures they are paying the rate that the poor insurance is actually worth.
4. Allow insurance and financial co's to gobble each other up, and/or create a list of approved suppliers that attain varying standards of service, removing the competing widget makers from the above equation and turning it into a monopoly / oligopoly equation wherein the equilibrium price is much higher and determined solely by:
4.a. The number and degree of collusion between the members of the cartel (cartel economics)
4.b. Demand-side inflexibility (see below)
4.c. The mass production efficiency curve of the monopolistic producer (a monopoly will want to sell more and more of an overpriced product, but can't, even if the customer is forced to buy it, at a certain point it becomes less profitable to oversell it.) Subsidies can remove this "problem" for the insurer, as it has for the sugar and corn industries.
5. You can mandate price controls for the widget. This causes shortages as people try and use as much of it as possible and producers try to produce as little as possible (the bugaboo of command economy) but socially, it works. Of course, this is the point at which you say to yourself, "should insurance be a private utility run by a commission, mandated and essentially run by the gov't but with the profits going to the producers, like gas and electric, or HOA?" Keep in mind that the sole justification usually heard for private utilities is the enormous capital costs (non-customer investment) required to set them up.
6. You can mandate that every person (citizen or otherwise) buy your widget. This removes demand price flexibility from the equation altogether, since it eliminates the power of the consumer to have any role in setting the price, since the price point in any market (capitalist or communist or what-have-you) is determined by the point at which the customer walks away from the table. This turns the product into what is known as a utility. If the utility is mandated but not price controlled, then the good becomes a natural monopoly and the price is determined purely by monopoly economics, i.e. whatever maximizes profit for the supplier.
Keep in mind that a monopoly NATURALLY SEEKS to sell to every single consumer in the marketplace, so claiming that "forcing" insurers to SELL their product to more consumers by forcing said consumers to buy it does nothing to "increase efficiency" except in the sense that additional insurers tap into the newly formed captive marketplace (what do you want to bet there's a list, state by state, of who can participate?) but this is unattainable for an unregulated monopoly. That is where the fines and the subsidies kick in to ensure that this bill operates essentially like Franco-British Mercantilism of the 1700s.
But this does NOT "increase efficiency" except in the Greenspan sense of lowering premiums for the existing upper middle class who have coverage by removing the requirement that they subsidize the indigent through traditional marketplace dynamics, by forcing the indigent to pay for coverage at full market rate (remember, the burden is on the lower middle class and working poor to prove they are eligible to apply for the "exchange" (which is simply a subsidized market-tested lower-cost version of the same private products, like when a company spins off its bargain brand into a separate business unit, a common trick to do in-house in a monopoly economic situation) to avoid a fine, like proving you're eligible to stay on welfare, and they'll be treated the same way as welfare recipients since the POLICY OBJECT of the "exchanges" and non-existent "public option" is to serve AS FEW PEOPLE AS POSSIBLE in order to finance the system with fines and privately insure as many people as possible, who are expected to lower premiums for existing upper-middle-class policies while magically removing the uninsured from the rolls the way they removed all those people on welfare and poor standardized test-takers from the rolls, the purpose of the whole endeavor.
|
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
