The Problem with the health insurance industry is that there is no free market for it.

[Solon]

This is one of those ideas that just popped into my head this morning, but it seems to make sense. Think of a traditional capitalistic market, such as toys, food, or pretty much any other market. Generally the more competition there is in these markets, the lower the prices. Cost cutting measures in these industries would involve making more of the product per man-hour and for a few cents less, and make up the loss through volume. They can then try to out compete each other, etc.

I then realized that the health insurance(and most other insurance) industries don't work this way, in fact they CAN'T. What's the most effective cost cutting measure for an insurance company besides denying claims? Its volume, but not in mass production of some type of widget, instead by expanding the risk pool of insurers to low risk groups of people. The problem is that people don't get built off the assembly line.

There's a lot of talk about "choice" and competition within the insurance industry, the problem is that population shifts, and and growth, occurs too slowly for costs to drop. There are no pricing wars within this industry in regards to premiums, simply because the amount of people any individual company can potentially sign up is negligible, and may not offset the costs of paying claims.

Usually, in a capitalistic market, the more competitors there are, the lower the prices in that market. In the Insurance industry, the opposite happens. The reason is simple, for every new competitor out there, the size of the risk pool for EVERY insurance company out there actually drops, and this can increase costs for those companies that are then passed on to the both current and future policy holders.

This tells me that the industry itself isn't sustainable in the long term at all, and the cracks are apparently showing now. They can try other cost cutting measures, I hear a lot of talk of computerizing claims and billing, but over any extended period of time, this would have a limited effect. We were promised the "paperless office" back in the 1980s, I doubt that the 2000s can deliver on the promise any more than the 1980s had.

The most effective cost cutting measure for insurance companies would be consolidation, not competition, the problem is that this would be advocating for a monopoly, which is generally bad for customers of any sort. It seems to me that the insurance industry will end up being destroyed, or at least marginalized, in this country, if not by being replaced by some public financing system, then by destroying themselves. I just hope we are smart enough to be able to set up an effective public system to fall back on when that happens.

[Warpy]

1. Not only that, but we can't pick and choose when and how to get sick

It's completely out of our control. If it were in our control, we peasants would be content with a common cold a couple of times a year, maybe a case of bronchitis or two in a lifetime. The wealthy would have the failing hearts and necrotic livers requiring transplants, such organs being harvested from dead peasants who were more prudent in choosing their illnesses.

Nothing about health care fits the free market competition, for profit paradigm except equivalent drugs from different manufacturers and even then monopolization has taken over and price fixing is a fact.

Any candidate who talks about health care in free market terms needs to be rejected. Period.

[Froward69]

2. I concur completely!

There is no market in health. It is a demand necessity. Unlike food or shelter, both are necessities. Their is a free market for them. Markets that, for the most part lower costs. Neither are life or death.

No one will shop for a low cost emergency room when it is an emergency. If they do, no one will go across town in that emergency. The closest one is the choice. Regardless of cost.

[Lydia Leftcoast]

3. "Saving through competition" is a crock

If you're a self-employed person living in the Twin Cities, you have three options for health insurance.

They all charge about the same (a lot!) and offer crappy benefits (not many!). There isn't more than $20 a month price difference among them.

[Selatius]

4. Single-payer health care is the ultimate example of risk mitigation

Your assertion that spreading high risk over a large number of low risk people is correct. With single-payer health care, one entity represents everyone. As a result, it has all, not just some, of the collective bargaining power in terms of negotiating the cost of prescription pills and medical procedures.

Medicare operates on similar principles as far as collective bargaining power goes. The only problem is Medicare Part D makes it nearly impossible for it to negotiate the price of drugs with pharmaceutical companies.

Unfortunately, America is not going to see single-payer health care at all. Instead, you get mandatory health care laws, sort of similar to mandatory auto insurance laws that you see in most states. The theory is that the more people participate, the lower premiums can be simply because the risk is spread out over a wider area.

The only problem is private insurance companies exist to make a profit. Any reform that doesn't remove the profit motive out of the equation of insurance necessarily means money will be spent lining someone else's pockets. I'm talking, of course, of corporate welfare, which is what mandatory private health care plans really are.

If in your state there exists only a few health insurance corporations and your state passes a mandatory health care law, why should they not simply keep prices the same instead of dropping them in order to increase their profit margins?

[The2ndWheel]

5. You think a public system is sustainable over the long term?

It could be, if we had more people. If we live longer, healthier, and have fewer children, we won't have more people. You could use immigration to make up the difference, but then you're taking people away from another system. Then you have to develop a global system, but where do you go after that?

This is an issue with no prior example. Nobody has had to deal with certain aging populations in a globalized world. There are ways it could be implemented, but there will be downsides. One being that it might come to being built off the assembly line, just to keep the system functional.

I agree with basically eventhing you said. The state and the corporation work the same way though. There can only be one corporation(since competition ends in monopoly), and there can only be one state(since it needs a larger pool of people to grow). Both require more people. Who else is going to buy the mass produced products? Who else is going to pay taxes? Neither one is sustainable.

[Solon]

6. There is a difference between public and private systems...

For example, the public system can run at a loss, for years on end, if need be, as long as the money is able to be pulled from somewhere else. In addition, the government can implement plans for increasing tax revenue through economic development, etc. Actually, one of the potential side effects of having a single payer system is a possible economic boom, and a proportional increase in tax revenues to match that. If every citizen and employed legal resident aliens is part of the system, they will pay proportionally far less money than they do now, on an individual level. This can increase spending, investing, and savings, for millions of Americans, and lead to, if not job security, at least potential financial security.

In addition to this, there are other cost savings inherent in such a system, on the service side. Doctor's offices and private hospitals will produce far less paperwork, and far less overhead than they do now. They no longer would have to deal with many different insurance companies, or bill to them either. These savings would then be passed onto the government, and indirectly to the citizenry.

The Government has a trump card that no private industry can beat, and that's power, if deemed necessary, the government can institute temporary price caps, wage caps, etc. The key here is that this would be a publicly financing institution, that would be subject to democratic controls and accountability, that's the important thing.

The fact of the matter is that our entire world economy is unsustainable, but I'm just talking about a relatively narrow industry, that is in itself unsustainable. Our capitalistic society is premised on unlimited growth with limited resources, we are going to hit a wall. This could be a first step in transitioning our economy from one predicated on growth to one predicated on sustainability.

[antigop]

7. Why do you think large corporations self-insure?

Because it's CHEAPER.

By the same token, we should self-insure as a country -- single-payer.