It’s that time of the year again for us micro-business owners. We need to renew medical insurance policies for our employees and just like clockwork the price goes up another 10%. The increases are illogical and completely counter to everything we’ve learned about capitalism.
When it comes to the insurance or financial industry, if any Conservative or Libertarian thinks the American Economic System is a free market, they’re either a fool or extremely gullible. What we have now is an Oligarchy; a few large insurance companies loosely coordinating policies and pricing. There is no longer true competition in this or any other financial industry.
The big healthcare insurers are publicly traded companies and, therefore, are managed by Wall Street. This means they must meet two critical criteria to stay within the good graces of for profit investors: 1) increase year over year revenue and 2) maintain or increase year over year profit margin. In today’s economic climate and in a real free market, this would be impossible for insurance companies. But yet, they continue to set profit records and growth. How is this possible? Simple…we don’t have a free market. Just to clarify, this has nothing to do with Obamacare; it’s deregulation of industry going back to the early 1980s and accelerated in the early 2000s.
Let’s look at this more closely. Because of the Great Recession, many Americans are unable to continue buying their healthcare coverage so, today; fewer people actually have health insurance. This means insurance companies have fewer customers now than they did last year or even the year before. Fewer customers usually mean lower revenue but somehow they miraculously managed to increase year over year revenue and profit. To appease Wall Street, insurers just simple charged their customers more. Without a free market, we, as consumers, have no choice.
You may be thinking there are four or five big insurance companies so we do have a choice, right? No, we don’t. These few companies are unable to differentiate themselves because they are publicly traded and must cozy up to investor wishes by not straying from profit and growth path. This is why insurance prices from company to company don’t really vary. One may offer lower monthly premiums but the copays are higher and at the end of the day (or year), it all comes out to about the same.
There’s only one way to infuse a dose of competition into this industry and that is by allowing the public, of all ages, to buy into Medicare. This is truly a different type of offering to the consumer and would provide real competition for the insurance companies. Make these companies fight for customers by offering value.
Let’s bring back a free market economy, let’s have a little competition.