I have assembled quotations from my opponent Mr. Jon Godfread, and my attempt is to take what he has expressed, analyze them and pose a series of counter-questions.
“Free enterprise and the free market is critical to all businesses. Insurance is no different. More competition means lower prices and better products for consumers. I understand these principles and will bring them with me to the Insurance Department.”
#1 Mr. Godread, with your admissions of the vitality of competition to free markets, do you or do you not concede that regulations such as prohibiting the selling of health insurance across state lines reduce competition and results in lower quality and higher premiums?
I agree with you, the absence of government intervention in a marketplace is paramount to viable business environments. I also agree insurance is just like any other marketable good. If something is marketable, it’s capable of being peacefully exchanged without fraud or theft. According to Mr. Godfread, it seems there is nothing unique about insurance juxtaposed to other market goods.
In your correct analysis of increasing competition, it results in lower prices and better products for consumers. However, everything you just said is political rhetoric with aims of trading lip service for votes. Public regulation is anti-free market. If the definition of free market is the absence of compulsion, then any variation would result in an antagonistic position. Also, your claim that insurance operates efficiently and is held to the same mechanism under free markets, it would disqualify it from the “public-good” theory as well. Nobody is a ‘tish pregnant and you either have a free market, or you don’t. No matter how much that may make traditional “free market” conservatives uneasy, it is the truth.
I already know Mr. Godfread’s answer, it will be the same response as every single regulator and that is laws of economics only apply to certain things, but not insurance because of the complexity of in-network health providers. Well, that’s precisely the problem, the centralizing and cartelizing of health providers. The division of labor is drastically scaled back due to the ability to bar competition through occupational licensing and the monopoly control of health and health insurance providers.
Imagine if the auto industry required all technicians to be licensed and to satisfy the requirements meant years of schooling and continual credits. There would be a drastic number of technicians that would be taken out of the field. As a result, this intervention would increase prices due to the reduction of supply. Now also imagine that these same auto shops only opted to work with certain auto insurance firms, prices would increase further for the same supply-reduction. If the auto industry had as strong of a grip over regulation as the AMA has had for a century, the same apology for why selling insurance across state lines would apply for auto. Thankfully that isn’t the case, and thankfully the free market provides the auto industry with private certifications and means of offering higher training without barring competition.
“Insurance affects every part of our state’s economy, and the rising cost of health insurance is the number-one threat to small businesses across our state. More money paid in insurance premiums means less expansion, fewer jobs, and can mean the difference between remaining open or closing your doors. We can keep our insurance industry and our economy strong in North Dakota with the right person as commissioner.”
#2 Mr. Godfread, with the threat of rising health insurance and healthcare prices plaguing the economy, why then didn’t State regulation prevent this threat? Also is rising health insurance and healthcare prices a market failure or creation of government? If market failure, please elaborate or if the creation of government, why should the practice of centrally planned industry continue?
Again, this is a very contradictory statement. It starts out with identifying the current threat of rising costs of health insurance to business but concludes with the evaluation that “it’s all good” because with the right kind of regulation and bureaucrats acting as a watchdog for consumers, nothing can go wrong. If health insurance is the number one threat to small business, how is it possible the insurance industry and economy, under the control of the state, is “strong”? Isn’t that evidence that state control of any industry produces higher costs, lower quality and threatens the economy?
Everyone can point to an experience with the rising costs of healthcare and health insurance, but to simply mention these certain political buzzwords without addressing the root causes does not fully address or alleviate the problem of rising costs threatening the poor and middle class. By mandating more coverage and price/rating fixing based on government approved mathematical models deteriorates the cost-cutting mechanisms capitalism employs to offer consumers low prices and higher quality. Price/policy fixing schemes such as capital requirements, community rating, and rating bands prohibit the homogenizing of risks into certain pools that yield lower premiums. Insurance is meant for protection against unforeseen risks. In a centrally planned insurance industry, insurance is a method of third party payments. This model is a wealth-distribution scheme. Other policyholders are paying the expenses of policyholders disproportionally, due to the prohibition of policy-discrimination. It also triggers an artificial bubble in healthcare. Ballooning health costs are stemmed from price-fixed policies guaranteeing particular health service coverage. Boosting artificial demand will subsequently drive up the cost to attain health care especially with supply being artificially suppressed due to healthcare regulations.
“Businesses thrive on certainty, and my promise to the insurance industry is to be fair, reasonable, and accessible.”
#3 Mr. Godread, what is it about Capitalism that makes you say the following, “I believe in free markets but we need insurance regulations because the market can’t ___________?
Established businesses thrive on the certainty that established regulations will not put them out of business but will restrict entry into the market for upcoming entrepreneurs and potential competitors. Capitalism is based on the very real notion of the scarcity of resources. Profits are not a given, nor should they be. Businesses thrive on cutting costs and boosting productivity. Being a smart entrepreneur is critical to running a profitable business. However, adding additional costs onto entrepreneurs through regulations or taxes lowers the utility of the producer and subsequently the consumer.
As mentioned earlier, free enterprise lowers costs and raises quality juxtaposed to the antagonist position of centrally planned markets; how is it possible to have “fair and reasonable” regulation when every government action is the action of taking something from someone and giving it to someone else? This action is taking from consumers, entrepreneurs and giving it to Big Business. If someone is worse off due to regulated exchange, “utility” is not gained. If someone is not allowed to truly demonstrate preferences (regulation) the result is lowered “utility”. We must, therefore, conclude that government interference with exchanges can never increase utility.