Competition Doesn’t Require A Government-Created Market
It is amazing to me how many ostensible conservatives, and supposedly conservative business groups, are backing the Obamacare health exchanges based on the idea that it’s some sort of a marketplace for health insurance that will improve choices and competition.
Former Republican Senate Majority Leader Bill Frist is the latest to make that claim at The Week, arguing that the exchanges are something both parties should like:
The exchanges should facilitate competition among private insurers as they design new benefit packages and cut prices to stay ahead of the game. While I’m slow to favor a mandate, these exchanges will offer those who can benefit from insurance a broad array of tailored options and varying prices that should help them find it. Helping more Americans find and compare the private insurance they need and can afford should be an easy principle both political parties agree on.
The idea that we need a government-created market to facilitate competition is ridiculous. There is no exchange for car insurance, and yet that market is extremely competitive (judging by the number of insurance ads that bombard our radio and televisions). There is no exchange for cell phone service or laptops or tablet computers and yet that market too is very competitive.
The proponents of the exchanges talk about this government-managed market – where you can only choose from among government-approved insurance options sold at government-approved prices – as though it’s some sort of a free enterprise revelation. This is utter nonsense. We may as well be saying that the “company stores” of old, where employees were required to buy their goods at stores owned by their employers, are an example of the free market at work too.
The problem with health insurance is that the government murdered the market a long time ago. Health insurance policies can’t be sold across state line, and policies such as allowing employer-based insurance premiums to be deducted from paychecks pre-tax (a defacto subsidy), have stifled competition.
If we really want a free market for health insurance, we need less government regulation, not more.Tags: Health Care, health care exchanges, health insurance, health insurance exchanges, obamacare