Friday, March 19, 2010

"Big Health Insurance": The New Boogeyman

The Left has latched onto a meme that they have been using for decades in order to denigrate capitalism and the concept of "profits". It's simple to do, just use the word "Big", followed by whatever industry you'd like to criticize. You know the image it creates; big "fat cats", sitting around in their palatial office, devising new plans for squeezing you dry.

Actually, the reality is generally quite different. Sure, a lot of these industries move around billions of dollars, but how much are they actually keeping after all is said and done. Remember, if you have a 401K or a mutual fund, this is a salient question for you, personally.

The fact is, the Health Insurance Industry ranks 86th as the most profitable industries in America: (Click image to enlarge)

The problem with the insurance industry is that they've never had to really compete for business, thus forcing them to run more efficiently. If you look at many of the MOST profitable industries on this list, you will see highly competitive. A basic rule of free economics is that competition give the consumer a better product, at a lower price, and increases profits for the company.

As Professor Mark J. Perry (from whose blog I obtained the chart, above) concludes his post:
"And isn't one reason for a lack of competition that competition for health insurance across state lines is prohibited, creating in effect 50 state health insurance "cartels?"

Simply lifting this prohibition may well net us much of the reform we seek; turning it over the government to "manage" and "regulate" is a fool's errand.

No comments: