Sunday, February 10, 2013

Is Big Health Insurance the Next Government Sponsored Cartel?

Is big health insurance on track to being the next government sponsored cartel?  Many believe the end game is to phase out private insurance companies in lieu of a single-payer system, and for all practical purposes it does seem that way.  But, the way Obamacare is currently setup, these state exchanges would provide insurance from a pool of preferred companies at discount rates, or subsidize those who can’t afford market priced premiums.  Can anyone say Fannie Mae or Freddie Mac?

Health insurance companies see gathering clouds on the horizon.  The U.S. has an aging baby boomer population who will need plenty of care.  At the same time they need new customers to offset the cost.  The numbers don’t add up.  They need to force healthy, young people onto their rolls.  And who else can be a better enforcer/protector than the federal government?

As it stands now, a handful of health insurance companies have “most favored status” in individual states.  Blue Cross and Blue Shield dominate 44 of these markets.  As a result, they are facing class-action lawsuits for price fixing and stifling competition.  The federal government has also investigated BCBS for violating antitrust laws.  All of these problems could go away if Big Health Insurance could replicate what the banks did during the Progressive Era.

At the turn of the 20th century, big bankers and progressive politicians wanted a central bank.  The country had disbanded two in the past.  But that wasn’t about to stop them.  The bankers wanted to stifle competition and establish a safety net; the politicians wanted an unlimited credit line, hence, the Federal Reserve.  And we’ve all seen the intended results after the 2008 crash.  Big banks we’re bailed out while the taxpayers got screwed.

Could the Progressives model for banking actually be the endgame for big health insurance?  I believe they’re well on their way.


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