Conservatives Want People to Go To the Markets for Health Insurance

Conservatives Want People to Go To the Markets for Health Insurance

Conservative dream that if people are forced to make it on their own (so without help) many will act responsibly, so scrimp and save and do whatever they have to to make a go of things.  Thus when it comes to health insurance, they want to encourage people to spend their money wisely - on health insurance of course, and not on a new cell phone.  Those who succumb to irresponsibility - well they must meet their fate, debt and ruin.  

And no, I don’t believe this nonsense.  But it really is a foundational belief for conservatives.  


But if they are expecting the marketplace to come up with really cheap insurance for working folks, they are hoping for magic.  In fact, there is no working market for health insurance policies for those who are not upper middle class.  This is not a result of the ACA (Obamacare).  Before the ACA the market for private health insurance was almost entirely business owners and folks in private practice like doctors and lawyers. While these folks may not be “rich” they earn in the top tier in their region.  Thus is should come as no surprise that private health insurance policies never covered more than 6-7% of the total population.  

Most of those who are not insured (if employed) are in the lower income tier.  Well paid employees still generally have good employee benefits, and the business owners remain covered under private policies as always.  So there is NO MARKET for the bulk of folks who are uninsured.  If there was, there never would have been a need for the ACA. 

If you want a bit more detail about why we don’t and won’t have a market for the uninsured, you won’t get it from me.  Instead, let me give an example of what an effective market looks like.  

Let’s look at cameras.  The US makes no cameras, but still the world brings us whatever we want.  Are you going on a whale watch and want a cheap waterproof camera?  You can buy one for a few dollars.  Do you want to have best camera in the world?  Got $50k?  There is a camera for you.  Phones have camera, laptops too. 

Yes, cameras are sold in a very active market.  And competition works to drive prices down!

Bread is sold in an active market too.  Bread is available in almost every neighborhood, except a few high crime neighborhood.  Competition works there too.

But there is no effective market for health insurance.  Over the past 50 year, most of the major insurers dropped out, and as they did, no one took their places.  Starting in the mid 1980s, one by one - almost every insurer left. New York Life dropped its business, so did Met Life, so did Teacher’s Insurance, and Prudential and Massachusetts Mutual and everyone else too but a few survivors.  Aetna is one  United Healthcare is another.  The Blues remain too.  But that is nearly all. 

You can look it up.

The US props up insurance markets from time to time.  Rich folks like to own homes by the ocean; years ago, the private flood insurance market collapsed.  We don’t want the rich to go without a showplace, so the government took over.  The program was $24 billion in debt in 2014.  

Another federally subsidized market is that for crop insurance.  Farmers get price supports and crop insurance.  Some free market!

So why can’t we (the US as a whole) also subsidize health insurance?  After all, what is more important than the people of the US?  But when working folks need insurance - conservative scream No!



Who knows.   But there it is. 

PS: if you want to argue why, don't argue here.  It is enough to know what. 

Views: 62

Comment by Ron Powell on March 15, 2017 at 5:54pm

Aetna, based here in Hartford CT, survived in the health care market due in part to the fact that it dropped its auto insurance business.

Comment by koshersalaami on March 15, 2017 at 9:24pm

Yes, the question isn't welfare or no welfare, it's welfare for whom?

Comment by Foolish Monkey on March 16, 2017 at 1:37am

They just want us poor slags to enjoy the freedom of window shopping for all those spanking new shiny perks like low deductibles and drug coverage and plush ambulances when youre of a mind to mosey on over to the hospital on your way to a heart attack. 

Comment by JMac1949 Today on March 16, 2017 at 7:11am

America's  Big Pharma, Healthcare, Insurance Triumvirate has been a post WWII 20th Century shell game based on legal extortion driven by corporate fringe benefits, Medicare and Medicaid that left millions of citizens uninsured.  The result has been the most expensive medical care in the world with only mediocre quality while Canada's single payer tax payer supported system provides universal care at a fraction of the cost. 

Comment by Robert Young on March 16, 2017 at 1:03pm

according to Ali Velshi who grew up Canadian, and what he said comports with what I know, finds Canadian single payer healthcare perfectly fine, and (most important) can find no developed country with a healthcare as consumer-spend model.  and, of course, there isn't.  healthcare isn't like an iPhone, and if folks could get "good" healthcare for the price of an iPhone every year or two, they'd be kind of happy.  stuff it Chaffetz.

moreover, allowing for-profit health insurance turns insurance into just another consumer-spend, since profit-seeking corporations will segment the market by expected cost.  the finer the grain of the segments, the greater the profit.  the capital structure will collapse, since the number of individuals who can buy the high capital bits of healthcare (MRI, for instance) drops off.  the side-effect for them is that the cost actually goes up with decreasing use.  the 1% are just inherited wealth, not brains.

Comment by Terry McKenna on March 16, 2017 at 4:53pm

Robert, while I think single payor is best, the "for profit" model of health insurance is not really a big driver. Insurer's margins are not especially large. The real culprit is for profit medicine and unregulated drugs. The reason that I say that, is that TIAA was a non profit and so were the Blues but health costs went up.

Comment by Robert Young on March 16, 2017 at 5:02pm

-- the "for profit" model of health insurance is not really a big driver.


-- The real culprit is for profit medicine

pls. explain.  for-profit is just that.  whether the insurance companies or... who?  it is claimed that drugs amount to about 10% of total healthcare costs.  on the order of 80% of prescriptions are generics.

my recollection of the shift from non-profit to profit by the Blues was simple greed.

Comment by Terry McKenna on March 16, 2017 at 5:30pm

For profit medicine .. think of doctors forming down stream MRI providers and then selling the service to a captive audience, their patients.  States caught on over time and banned this but doctors make money for every service sold.  Their motives are to charge fees. Insurance companies motives are to control (limit) costs.  So disagree, not all profit motives have the same result.


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