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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: cnyndwllr who wrote (215876)	2/1/2007 5:24:59 PM
From: neolib	Read Replies (1) \| Respond to of 281500

So, after this long and rambling message, I guess I'm saying we better not look to the "free market" to fix any problems anytime soon. Ed You point out excellent issues. If you saw my earliest posts on the issue, you would have seen that I claim the dynamics of insurance as a payment method in health care is one of the main problems with cost containment. So I'm under no illusions that things are good. What I have been trying to get across to Geode is that insurance plays two very valuable functions: 1) Converts statistically unlike events for a single economic entity into regular budgeted amounts for that same single economic entity. This is a valuable accounting function. 2) Averages risks of statistically unlikely events across multiple economic entities. This is the function that combats economic disaster, i.e. there should not be bankruptcies as Geode likes to trumpet. What insurance does not do is magically create the means to pay for these events. The payment always comes from those covered, unless there is some external wealth transfer mechanism at work. There are many complex issues in the health care problem, but one must be able to clearly separate and analyze the individual components, before trying to stir them all into one mess. The problem with Medicare is that it combines all the above plus a good deal more into a single system with a single chain of command, and no competition. It is very close to FEMA from that standpoint. Tease apart the components, and have a national dialog on how to improve each part. Almost all of the issues you note as defects in the insurance industry, could be solved by making sure the market is more free, not less, provided transparency and accountability are there. I have long considered the issue of prices drops as an anticompetitive measure to block new entrants to a market. I think the best way to handle this is to place time rate of change limits on price drops. That is any company can only drop their rates by x.xx%/year. Most people focus on capping rates of increase, but IMO, this is exactly backwards of what you want to do. Think about that for awhile. I suspect the net result of placing limits on rate of drop is that overall rates state very competitive for fear of new entrants.