The UWIRE Forum

Conservatives support anti-capitalist monopolies in health care debate
August 28, 2009, 12:29 am
Filed under: Uncategorized

By Josh Green, progressive guest columnist

I’m a free-marketer. I believe the free market is great for business growth, strong economies and innovation, but not so great for self-regulating and preventing abuses.

And I thought all my favorite conservatives out there favored free markets, too, until we got into the nitty gritty of health care reform. Then I learned that conservatives actually want to protect monopolies, the antithesis of the free market.

Monopolies, or oligopolies, are systems in which one or a few companies dominate a market to the point where competition is kept from flourishing. Companies with a dominant market share (think Microsoft or Google) can’t help themselves — they want to maintain that dominance, set pricing on their products that ensures large profits and basically keep any upstarts from ruining their good deal. This is why we have anti-trust laws — monopolies, we’ve found throughout history, kill competition, hurt consumer choice and are about as un-American and anti-capitalist as an institution can be.

Then why are conservatives defending the monopolies that health insurance companies enjoy throughout the United States?

Don’t believe it? The facts aren’t really in dispute.

Even the American Medical Association  — which has been resisting real reform for decades because its doctor membership fears its six-figure plus salaries might take a small hit — admits in a report that 24 percent of all the metropolitan areas it surveyed has an insurer with 70 percent or more market share. Sixty-four percent of all markets have an insurer with more than 50 percent of the market.

Still don’t believe it? Check out the map yourself.

Anyone with business sense will tell you that those numbers give a false impression of a robust health care market. Those with a little more knowledge of the health care business will tell you that it’s no surprise that concentrations like this occur.

A health insurer is not in the business of trying to get into as many markets as it can nationwide. It’s in the business of spreading risk — translation: maximizing young, healthy people in its pool, and minimizing old, sick people. They want to cherry-pick the best markets, not offer insurance to rural folks or poor folks who tend to have higher health risks.

So we have a monopoly problem. Now what? Can we force insurers to get into markets they don’t want to? No. Can we ask an insurer in Texas to offer the same plan to someone in Michigan? Not even close. Insurance premiums are based on actuarial analysis of small geographic areas (we’re talking zip codes). Health care plans, insurers will tell you, don’t cross state lines as a matter of business strategy, not because the government is putting up walls. Insurers would  never offer a national, cross-state, one-size-fits-all plan, it would be business suicide.

When conservatives rail against a public plan as if it’s the British National Health System, they are promoting monopolies and sinking competition. They’ve become exactly the opposite of what they claim to be. They want to be free-market cheerleaders, yet they’re cheering for the companies that conspire to clamp down on the free market. They claim they want costs to be brought under control, yet they want the magic of the free market (i.e. the insurers themselves) to do the controlling.

You cannot make an argument out of one side of your mouth that government is a clumsy, inefficient administrator of any service and should be kept out of health care, while out of the other side you argue that government is TOO efficient and has too many advantages over private insurers. It’s one or the other, but you can’t have both.

If you believe in the free market, you believe in providing an alternative — yes, even the dreaded public option, as much as it makes your stomach turn — to monopolistic companies who have no interest in keeping our bodies or the nation’s economy healthy.

Josh Green is a graduate student in political science at UC-Berkeley.

1 Comment so far
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I would really like to debate on this however your premise is simply incorrect. Conservatives DO support reforming changes (named above +more) that would surely bust apart existing monopolies.

I am a conservative, and this article that seems to attempt to portray a moderate voter’s opinion, that is not the case. You cannot lump all conservatives together and in this case the vast majority of conservatives that I know support portability and support transparency in medical costs.

We do not want more government in our lives! We have too much now, and it’s far too inefficient. Before anyone can say they want more government involvement in healthcare industry (and be taken seriously without a laugh from those who are informed) they need to advocate for our government to prove that they can handle the comparably small amount of responsibility they have now. They need to advocate for the government to not make another 18 billion in improper Medicaid payments which happened in 2008, they need to push for a solution to the $56 trillion in unfunded liabilities for Medicare and social security. NEITHER is being discussed or addressed in the current legislation. I challenge you to name one industry that has performed more efficiently after being taken over by government.

No one is saying that the government is too efficient (no sane person), what is being said is that you can’t have true competition against a player who also happens to be the referee. And NO Public vs. Private school is not an example. Public school doesn’t tell private school the type of curriculum or tell private schools how many students they can take or what they can charge for tuition, or regulate teaching requirements. And USPS is not an example either; the reasons are very obvious and relate to the ones just named. You cannot compete with someone who can print their own money.

Back to the subject…. Your analysis is void of the true nature of capitalism; if borders are opened up insurers WILL offer in more places and prices will go down. There have been pushes for this by many major insurance companies in the past (others do not want it because they do have a drastic (but closed) market share and fear they would have to compete if it is opened up). I agree that there should be protections from monopolies but creating a government monopoly (which will be the end result) is definitely not the answer, there is no way to beak that monopoly.

Your analysis can be debunked simply by looking at auto insurance which relies on the same principal that you stated health insurance relies on, they make money on the safe drivers while charge more for those who are higher risk (makes sense). We now have discount auto insurers like Geico, Progressive, Esurance, etc that provide throughout virtually all states, which were not nearly as present when it was a state by state industry. This expansion will happen with health insurance for the same reason it did with auto, increased market & more opportunity for profit (since you are a self stated capitalist you shouldn’t have a problem with that).

An aside…Auto Insurance is a great example also of how government intervention ruins competition. In Massachusetts the government established the Massachusetts Division of Insurance which was supposed to ensure and foster competition as well as guarantee coverage (by the way Massachusetts has one of the highest costs for insurance in the US). The exact opposite happened, next time you see a Geico ad look at the fine print and you will find that they are not available in Massachusetts. This is because of state induced price controls & CAR (Commonwealth Automobile Reinsurers) which guarantees coverage. Well, that will be changing soon and it is because the new director of insurance decided to abolish CAR and allow companies to set their own prices in order to increase competition. Enter Geico and other discount insurers which almost immediately said that they will be entering the Massachusetts market. And Prices There will be a much higher supply of insurance and the prices will go down.

Conservatives do support capitalistic reform we just know that the package being sold by the government is not in any way capitalistic. There is nothing more anti-capitalist or frankly anti-American than giving the government more control over individual American lives especially in healthcare which is a very personal aspect of life.

Comment by ZachL

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