Thursday, July 12, 2012

Government, Monopolies, and The Market

The mooks at CBS are hooting and hollering over how the GOP is trying to repeal Obamacare without something to replace it. The problem is they're wrong. Conservatives want to replace it with a free market by allowing insurance buyers to go across state lines, eliminating restrictions and requirements on coverage, reforming tort law, and providing a tax credit to people that have insurance.

See, conservatives get that the enemy of freedom is a monopoly, but when you have an educated and engaged populous a monopoly cannot stand. There is always someone trying to get in to the market, competition is an evolutionary force in the marketplace. Look at phone services, when the government controlled things there was one style of rotary dial telephone, and after a few decades they finally came out with the touch-dial telephone. When an independent inventor came out with the answering machine it was actually illegal, the government considered it tampering with government property, namely the phone lines. Within two decades of the telephone industry being privatized we had cordless telephones with built in answering machines, call waiting, conference calls,  and the first generation of cell phones in development, within another two decades we are at the point where our cellular phones have more processing power than NASA did when they sent a man to the moon, act as video cameras, music players and provide internet access on the go.

The government didn't mandate any of that, in fact when you read about some of the scandals government officials have gotten in to lately it becomes pretty clear these people are behind the curve when it comes to technology. Companies made all these improvements to phone technology because they were openly competing with each other and needed an edge. The tech improved, prices dropped, and now you are a freak if you don't have a cell phone. In the same way, if we remove government interference companies will come out with a multitude of plans to fit as many needs as possible so they can get as big of a market share as they can. When every market role has been filled insurance providers will enter a bidding war for your business, prices will drop as low as market conditions allow for with the company still making a profit.

Tort reform is a sticky issue, one that will be difficult to hash out, but isn't central and reasonable people can argue all day about who should bear the burden of the costs of frivolous malpractice lawsuits. However strengthening the laws and making them less open to abuse will lower the cost of malpractice insurance for doctors, which means they will have lower overall costs and not have to pay as much for their insurance in the case of doctors with their own practice, in the case of hospitals the issue is much the same, but simply magnified due to the number of doctors under the hospitals umbrella of coverage. Providing a tax incentive is a simple issue however, give people a way to recover some of the cost of getting insurance and it changes their cost/benefit calculus that occurs with every purchase. We don't need a huge government bureaucracy to implement any of this, in some cases the solutions I'm talking about here and conservatives as a whole have been suggesting for years would eliminate bureaucracies already in place, a nifty side benefit for the taxpayer since it would cut government spending.

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