The Health Care Squeeze

011313_HealthcareCOVER_t670Anthem Inc. is in the process of trying to buy Cigna Corp. For anyone who doesn’t know these are Giant Health Insurance providers. There are only a handful of these companies. The story is that consumers will benefit because cost savings will be passed on to patients.

This is the same logic that was employed in Texas as tort reform was instituted. Will lower costs be passed on to consumers? Since all of economics is based on one incentive, self interest, there is no chance at all that there will be savings for consumers. Corporations merge for the purpose of making additional profits and there is no other reason. There is nothing wrong with two corporations merging in order to improve profits. It is wrong to point to a benefit for patients when that is not even a possibility.

What passes for health insurance is actually a payment management system that extracts money out of patients and physicians. Corporations like Anthem and Cigna have no true utility to society. They are a cause of high health care prices. Government guarantees their market. The insurance companies simply skim income off of everyone by using government to force patients and doctors to deal with them. Americans don’t seem to mind but they are being impoverished by this system. In the long run these entities will not survive but they are inflicting a lot of pain in the mean time.

Monopolies, even those created by government, eventually destroy themselves. The process is slow but consumers are constantly searching for substitutes for what monopolies provide. Remember that “only phone company in town.” High prices for land lines and high long distance rates helped usher in the mobile phone. One of the consequences of squeezing physicians is that it creates an incentive to charge patients without providing treatment. Who has not had the experience of going to a family physician and being referred to a specialist for a run of the mill condition. This is how mass marketing medicine works. Herd them in, herd them out and collect collect a fee. This is not a preference of doctors. They have a choice of getting paid for not treating patients or taking a loss. Actual health care is becoming rare.

What happens next? People everywhere are discovering the curative nature of everything from Aloe Vera to oral supplements made from cannabis oil. Watch for doctors in foreign countries to start offering Skype appointments. More Americans will start traveling to Mexico and other countries to get treatment. The black market drug business will flourish even more than it already is. Eventually a few doctors will figure out that they can make a good profit by offering cash patients a hefty cash discount. What is a physician’s profit for an office visit? It is probably less than a patient’s insurance copayment

Don’t look for Americans to complain. They have been told they have national health care by authoritative elected representatives. It may take the average Joe twenty years to figure out that there can be a difference between what a system is called and what it actually does. For those of us who are euphemism free and use commonsense this is not a problem. There are not many of us.

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About Fantasy Free Economics

James Quillian independent scholar,free market economist,and teacher of natural law. Who is James Quillian? Certainly I am nobody special, Just a tireless academic and deep thinker. Besides that, I have broken the code with respect to economics and political science. Credentials? Nothing you would be impressed with. I am not a household name. It is hard to become famous writing that virtually no one in the country is genuinely not in touch with reality. But, if I did not do that, there would be no point in my broking the broken the code. If you read the blog, it is easy to see that there are just a few charts, no math and no quantitative analysis. That is not by accident. Given what I know, those items are completely useless. I do turn out to be highly adept at applying natural law. Natural law has predominance over any principles the social science comes up. By virtue of understanding natural law, I can debunk, in just a few sentences , any theory that calls for intervention by a government. My taking the time to understand the ins and outs of Keynes General Theory is about like expecting a chemistry student to completely grasp all that the alchemists of the middle ages thought they understood in efforts to turn base metals into goal. Keynesian theory clearly calls for complete objectivity. Government can only make political decisions. Keynesian techniques call for economic decisions. So, why go any further with that? Fantasy Free Economics is in a sense a lot like technical analysis. Technical analysis began with the premise that it was impossible to gain enough information studying fundamentals to gain a trading advantage. Study the behavior of investors instead. Unlike technical analysis, I don't use technical charts. What I understand are the incentives of different people and entities active in the economics arena. For example, there is no such thing as an incentive to serve with life in the aggregate. In the aggregate, only self interest applies. It is routinely assumed otherwise. That is highly unappealing. But, I am sorry. That is the way it is. I can accept that because I am genuinely in touch with reality. Step one in using Fantasy Free Economics is for me to understand just how little I really know. A highly credentialed economist may know 100 times what I do based on the standard dogma. Compare the knowledge each of us has compared to all there is to know and we both look like we know nothing at all. There is always more than we don't know than what we do know. I am humble enough to present myself on that basis. Why? That is the way it is. I am not bad at math. I have taught math. What I understand is when to use it and when to rely on something else. Math is useless in natural law so I don't use it. While others look at numbers, I am busy understanding the forces in nature that makes their numbers what they are. That gives me a clear advantage.
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