O’Reilly Tonight: Let Insurance Companies Run Wild?
Would libertarian Stossel let insurance companies run wild? That’s how Bill O’Reilly teases my Factor appearance tonight.
Bill and I at least agree about the problems with Obamacare, especially the out of control costs it would bring. But he thinks that the government must step in to “regulate insurance companies”, to “make the market competitive.”
But the market is actually pretty competitive. There are around 1,300 companies nationwide. Many employers self-insure, setting their own rates. The industry certainly doesn’t make monopoly profits: Last quarter health insurance companies made 3.4%. Software development companies made 20%. The entertainment industry made 8%.
But Bill is right to complain that competition is restricted because we are not allowed to buy insurance from other states. Those of us in states with the most meddling politicians are stuck with over-regulated insurance.
We New Yorkers, for instance, are forced to buy insurance that includes fertility treatments and chiropractors. It’s one reason why I must pay more. Another is our “community rating” system, which forces insurers to charge sick people the same rates as healthy ones. The cheapest plan offered is Los Angeles is $660/year – in NYC it’s $2,112/year, based on rates for a 25-year-old male at ehealthinsurance.com. A zero- deductible HMO is $3,780/year in CA, vs. $14,736/year for a comparable one in NY.
O’Reilly also thinks the government needs to step in and ban insurers from discriminating against pre-existing conditions. But such “discrimination” is one GOOD thing about insurance. It encourages good behavior. Health insurance companies ought to be able to charge the fat smoker more, just as flood insurance companies ought to charge Bill and me more for flood prone properties. Charging more for bigger risks is the business model that makes insurance useful. And it’s one thing that puts downward pressure on costs.
O’Reilly also objects to insurers “price gouging”. On GMA last week, he told Stephanopoulos: “The Democratic side has a compelling argument that the private health insurance companies are gouging. They’re gouging, all right?”
Insurance companies aren’t gouging – there’s no such thing as “gouging” in a competitive market. Anyway, the biggest health insurers in most states are non-profits (like Blue Cross Blue Shield). Yet their products are no cheaper.
Obama talks about federal limits on “excessive” insurance premiums, but price fixing always hurts consumers. Nixon regulated gas prices. Wasn’t that fun? Long lines and fist fights.
The best answer is the market. Individuals need to pay more out-of-pocket. It works well in Singapore.
Someone will ration care. Government and insurance companies do most of that now.
It’s much better if individuals do it.
stossel.blogs.foxbusiness.com |
