Not Always

From time to time, as most of you already know, I’ll find myself getting really unpleasant with someone for over-simplifying the issues of a discussion. I try not to be a jerk about it; everyone does this sometimes, either because they don’t know the details of the subject well enough to create a better argument or because they feel some elements of the subject are too elementary to bother describing in detail, or both – although we should acknowledge that in the first instance people don’t always realize they’ve done so. But I get very tired with people who have never studied business and have no clue how finance actually works who then make fatuous statements about how things should be. Think of it as the private enterprise equivalent of that idiot many of you saw on the news who actually said “I won’t stand for Government interference with my Medicare!” – and could not be convinced that Medicare was a Federal government program…

A good example popped up online this week, with an article about how Anthem Blue Cross is raising their rates for everyone who has an individual policy with the company. This by itself is hardly shocking; most insurance companies have regular raises, and the individual accountholders don’t have the protection of a big group – a single customer threatening to take their business elsewhere just doesn’t have the same impact as UCLA threatening to take 25,000 customers to the competition, for example. What is shocking about this story is that Anthem is raising their individual rate by up to 39 percent this year – after raising it as much as 68 percent last year. Well, that and the fact that there are still people out there who insist that our current national healthcare system isn’t broken, anyway…

Now, I should tell you that I was one of those Blue Cross Individual Policy customers for a number of years, and I never had any trouble with my coverage. But by the same token, I was healthy at the time – and I never had my rates double in less than a year…

A while back I noted that the business model behind the sub-prime mortgage market was inherently flawed, in the sense that it could not continue indefinitely without coming to grief – in other words, flawed in the same sense that a Ponzi scheme is flawed – and that if the institutions involved didn’t voluntarily regulate their industry, the government would be forced to do so or else let the industry crater and take the rest of our economy with it. Now let me suggest that the same kind of disaster is brewing on the health insurance side of the industry. Somewhere between 70 and 80 percent of our economy (it depends on how you count it) is based on the kind of small businesses that rely on individual and small-group coverage policies, and if their health insurance costs keep doubling and re-doubling each year, it will not be long before they start going under en masse – and take what’s left of our economy with them…

This is one of those cases where ideology will not change the bottom line; where the belief that our current system (where we just keep giving more money to large corporations each year) can save us is just as idiotic as the belief that the very best health coverage should be available to everyone, for free, and that there should be no increase in fees, taxes, or anything else that burdens the public. The financial crash of 2008-2009 really wasn’t that hard to predict, and neither is the next one – which could start at any time now. From where I’m sitting, the question of whether an industry can be trusted to regulate itself, and whether government intervention is better than just letting that industry crash, is generally the same answer:

“Not always…”