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With increasing government regulations, controls, monopoly on money supply, the currencies depreciated, and inflation and cost of living soared. It became increasingly difficult, for an average Joe, to pay for special needs, disasters, sickness, accidents, and sudden and unexpected losses. So, people started to organize different types of mutual funds, and community based organizations and funds, to cover the unexpected. These arrangements were very successful and popular, and helped keep the costs low. They were run and controlled by members. In order to protect their interests they did everything possible to get quality services at affordable costs. They would typically sign contracts with providers on fixed salary bases, instead of pay per service bases.
This was most evident and successful in health care payments. These were managed by mutual funds called fraternal societies. The popularity of fraternal societies, started to attract businesses and big corporations towards third party health care payment systems. But, the problem was that the corporations have administrative costs, hence could not compete with mutual funds in prices. So, started looking towards their usual partner in crime, government. They started lobbying for legislation that would make it harder for mutual funds to survive and compete. They came up with two major arguments. One, the cost of health care under fraternal societies is too low, and discouraging for medical professionals.
Two, the management health care system is in the hands of unprofessional, mutual funds members, which is not fair. It must be under that control of professionals i.e., doctors themselves. So, government stepped in to solve that problem. They passed regulations which made it harder to get license to practice Medicine, in order to ‘raise the standards of practice in Medicine and Surgery’. This, of course, reduced the supply of licensed practitioners which on the other hand jacked up the prices and overall cost. This shortage of Medical professional and higher cost, made it difficult for small local fraternal societies to survive.
So, government sponsored corporations stepped in, and took over the payment system. Just eighty years ago, the annual cost of health care per member of society was about one to two dollars per year which was a day’s wage for an average worker. Big insurance companies started supporting the increase in prices and cost for three reasons. One, they had to cover their higher administrative costs. Two, higher prices pretty much guaranteed the continued support from health care establishment. Three, the higher prices were almost certain to knock out the self-pay, and fraternal societies.
Since then this cartel between health care establishment, insurance companies and government has been working very well, in their interests. With self- pay and fraternal societies almost out, and government regulations limiting the competition, there is pretty much no competition left. The prices, overall cost and profit margins kept rising for a very long time. Of course, when problem gets really worse, there is an outcry from consumers, everywhere. So, government comes in again. They say, okay we messed up the system with our intervention and regulations. Now, we are going to solve it with even more intervention.
Here comes Affordable Care Act, commonly known as Obama care. Since the health care cost was skyrocketing, and getting out of reach of an average Joe, the biggest selling point for Obama Care was that it would reduce the health care cost. To the surprise of Obama care supporters, cost kept rising. If you use your common sense, why not? About thirty million, tax payers’ financed, new people are added in insurance pool. There are mandates and new requirements for insurance plans to comply with. These mandates and requirements cost money. On the other hand the competition in health care insurance business is still very limited, by government regulations. Consumers still cannot buy across the state lines. Why would you even think that all this mess will reduce the cost?
As the failure of ACA is getting more and more imminent, liberals and legislatures are starting to play the same old music. ‘It is failing because there are not enough government regulations and control. We need universal health care’. Really? Haven’t you heard this before? While newer government subsidized subscriber are growing in number, the paying individuals and small businesses keep losing the coverage. This is the recipe for another financial disaster. How can the system survive with this kind of enrollment stats?
Rising cost is making it even less attractive for younger and healthier people, who, in accordance with the original plan, were supposed to pay for older and sicker people. We are not even recovered from big banks and financial corporation’s bailout, and it looks like that another huge health insurance companies’ bailout is imminent. Are we going to leave a totally bankrupt country for our nest generations? With federal annual budget deficits around a trillion dollars, national debt surpassing sixteen trillion dollars mark, another, potentially, multi-trillion dollars bailout can totally ruin our economy and finances.
At the top of all this mess, once Obama care mandates, taxes and penalties kick in, they are going to hurt our fragile recovery, even more. Unemployment rate is till around 6.7%. For job seekers, it is still very hard to find job, especially if it is full time and to the level where they were before the financial crisis of 2008. Millions of individuals, families and small businesses are already bankrupt or at the verge of bankruptcy. This environment is very favorable for big corporations to establish and maintain their monopolies over respective markets. These monopolies are going to mess up the free markets, even more, in long run.
The solution is very simple, if people at the helm of affairs are listening. Get the government out of our business, open up health insurance markets, let us make the entry in health insurance business easier, by lifting regulations and improve competition by allowing consumers to buy across the state lines. Let them compete like car insurance companies, for example, and watch how they fight for your business, provide much better service and coverage, and bring the cost down. Improved competition and lower costs will also encourage self-pay and revival of fraternal societies.
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