Wednesday, October 30, 2013

Insuring Profits for Insurers

Since at least World War II, the health insurance industry has been the beneficiary of federal government support.  This handy PBS chart explains how “wage and price controls (were) placed on American employers. To compete for workers, companies begin to offer health benefits, giving rise to the employer-based system in place today.”

By making health insurance premiums tax deductable to employers but not to individuals, companies were incentivized to provide this perceived high-value benefit to workers that the employer was able to attain at a steep discount.  Thus the health insurance industry prospered as the federal tax code motivated more employers to offer this benefit in lieu of higher cash wages.

By taking individual consumers out of the insurance market and by states severely regulating entry into the health insurance industry, the state insurance markets turned into oligopolies, or cartels.  Employers and workers were offered an abbreviated assortment of suppliers, plans and prices. 

As with higher education, housing , mortgages, agriculture, defense contracting or any other industry that government begins to control, the prices for healthcare and health insurance escalated as competitive market forces were suppressed.

 Harry Browne, the former Libertarian presidential candidate observed that   "Government is good at only one thing. It knows how to break your legs, hand you a crutch, and say, 'See if it weren't for the government, you couldn't walk.”’  And so it goes with healthcare.  Government launched an inflationary spiral that it blamed on free markets and then claimed that it had to fix with added laws and regulation.

Of course, free markets have never been allowed to work in the U.S. healthcare market for well over half a century.  Thus the Affordable Care Act became law to add layers of complexity to the mess that government had already created.

The crony capitalist friends of our elected representatives were licking their chops.  This new law would force millions to buy their products and force millions more to pay higher premiums.  Laggards who refused to participate would be punished just like draft dodgers and tax evaders. 

Forbes reports that big insurers were giddy over the prospect of windfall profits.   In a related article the same publication notes how the ACA enriches only the insurance companies and their shareholders

But wait!  The embarrassing malfunctioning of has spurred lawmakers to call for a delay in the enrollment mandate. 

The insurance companies are crying “Foul!”  They are pleading before Congress that any delay may result in a shortfall of profits.

To paraphrase Allen Iverson, “We’re talkin’ about profits here”.  No going out of business.  Not shutting down.  “We’re talkin’ about profits”.  Windfall profits, that Wall Street has been promised.

If profits fall short, there is a way to address that.  Cut executive bonuses and perks.  Cut staff.  Reduce pay.  Take furloughs.

What Congress cannot allow happen is to allow the big insurers and their Wall Street backs to make their numbers on the backs of regular Americans who are struggling to enroll in a crappy, dysfunctional and overpriced health insurance sinkhole.

Call your representatives and make sure that they resist the onslaught of high pressure, big money lobbyists.  Call them today!

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