I attended a fascinating and boisterous town hall meeting last Wednesday night, run by Democratic congressman John Hall. I give him credit for holding the event, albeit one announced with almost no advanced notice. Word got out anyway, and the auditorium was truly SRO (even the aisles were filled with sitting attendees).
This meeting was much like the many other reported meetings from around the country, with emotions running high on all parts of the ideological continuum. To be clear, the tone in the room was clearly stacked against a government takeover of health care and insurance. I’ve personally never witnessed anything like this — thinly veiled anger at the potential power-grab of government in a way not seen for generations. It was the democratic process in its purest form: live, raw and messy.
But it struck me that one common theme was this: health insurance companies are the villain to almost everyone. Rep. Hall, who would ideally see a single-payer system, wondered aloud about why the insurance companies have not already “fixed the problems”, and because of that, declared that dramatic government action was needed instead. It was a brilliant demonstration of just how misunderstood the current market for health insurance is, namely that there is almost no market at all. Everything insurance companies do, right down to which ones will sell a product in a state, is heavily regulated by government.
So I left the meeting with the following thought: Why not direct all the collective anger at the insurance companies back at them directly, by in a sense, throwing them to the lions of each other? Remove all barriers to their free and total competition. Let them sell any product they want, to whoever they want, at any price, anywhere in the world. Let them beat each other up in the public arena, and may the best companies win.
Note that the companies that make the most people the happiest will do very well, and the ones that do not will go bankrupt. However, with no governmental crutch, it will be individuals who decide what makes them happiest, whether that’s a particular kind of coverage, a particular cost structure, lifetime payment ceilings or whatever. If at any time a company is found to be making “obscene profits”, it will attract the attention of others who will seek to steal customers by offering an equivalent product at a lower price. In this way, health insurance inflation will be kept in check by market forces, as dictated by us, not government.
This is how nearly every other sector of our economy works. The people dictate to companies what products they will buy and at what price. They tell their friends about good products and service providers. And they steer their friends away from bad ones. It works well, and can work for health insurance, too.