Competition only lowers prices when there is a free market

Yahoo! Finance almost understands economics:

Insurance companies that sat on the sidelines of Obamacare last year are looking to get in the game in 2015. This could mean more options and lower premiums for Obamacare enrollees next year.

A new analysis from The Advisory Board says that in every state where data is available so far, more providers are asking to participate in Obamacare next year.


If United and other large insurers join the marketplaces, that could mean big savings for consumers. A study by the National Bureau of Economic Research found that the addition of United Healthcare alone would increase competition in the market that will drive down premiums. The study said that premiums for silver plans in 34 states including Illinois would have been 5.4 percent lower if the giant insurer would have participated in the marketplaces, the Chicago Tribune noted.

This is correct under a free market system.  More firms entering an industry leads to more supply, which will lead to a lower price ceteris paribus.  Unfortunately, the passage of the Patient Protection and Affordable Care Act transformed the health insurance market from a competitive market into a cartel.  Health insurance premiums are no longer set by competition among firms, they are set by the government.  And this means that even though more firms are entering the health insurance market, premiums aren’t going to go down.

Because they can’t.  Firms are prohibited from lowering premiums by the law.  And that’s why new health insurance firms are entering the market: because the firms that are already in the market are making obscene profits that are guaranteed by the government.  After all, why do you think that lobbyists for the health insurance industry wrote the law in the first place?

One of my biggest questions has been, “Who wrote the PPACA?”

The standard media answer is Montana Senator Max Baucus, but senators don’t “write” laws. They hire others to do it.

CommonGroundAmerica’s  (CGA’s) answer stunned me.

The PPACA sprung from an 87-page white paper “put together” in November, 2008 by Baucus’ (then) chief healthcare counsel, Liz Fowler. Before working for Baucus, Fowler was a VP at WellPoint, the country’s second-largest health insurer.

Baucus, quotes CGA, said Fowler’s white paper, “became the basis, the foundation, the blueprint from which almost all health care measures in all bills on both sides of the aisle came.”

Also according to CGA, the health insurance industry had, still has, and will continue to have every interest in seeing the PPACA written, passed and put into play.

According to Kaiser Permanente, total health insurance costs in 1980 were $286 billion. By 2010, they had increased nearly tenfold to $2.3 trillion. As the population ages, that number is expected to soar. According to federal estimates, health care costs will double in the next decade and are likely to double again by 2030, when 70 million Americans – fully 20% of the population – will be over the age of 65. Could such dire estimates have provided the health insurance industry with a powerful $10 trillion incentive to move this looming liability off their balance sheets and onto the backs of the American taxpayer?

As it turns out, the Patient Protection and Affordable Care Act is not intended to make health insurance more affordable for the American people. It is designed to make the American people more affordable for the health insurance industry.

In short, CGA makes a solid case that the health insurance industry —

tired of decades of failed attempts to influence Congress to create a national health care plan which would immunize them from the looming trillions of dollars in liabilities they faced as the boomer generation aged, simply decided they would infiltrate Congress instead and write the legislation themselves.



Categories: Healthcare, Obamacare, Propaganda

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