Obamacare - why do prices change?

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   innersmiffposted 10 years ago

   I hope this to be as non-combative as possible: I will try to explain how thinking economically will lead you to understand how detractors of Obamacare see it
   
   The question is: how will forcing people to buy health insurance affect premium prices?
   
   It may be appropriate to ask first how prices got so high in the US in the first place. Firstly, what do you think stops Coca-Cola from charging $100 a bottle? Simply put: Pepsi. If both Pepsi and Coke decide to charge $100, we can assume other cola companies would come to the fore and charge less.  If you agree with this very basic economic law: competition lowers prices, there is no reason to think this could not be applied to healthcare.
   
   Say they made a law that you had to get a licence to make and sell Cola, and you had to go through months of training and testing in order to acquire one. Clearly this would put a high economic strain on smaller businesses, and will put off competition from entering the market. Coke and Pepsi are huge conglomerates, and can therefore afford it.
   
   Coca-Cola is based in Georgia, and Pepsi is based in New York. It would be logical to suggest that if Pepsi was banned in Georgia, and Coke was banned in New York, the prices of the respective Colas would increase. This is because there is again less competition.
   
   But now Coke and Pepsi are so expensive, people are choosing not to buy them at all. "Oh no!", the companies say to the government, " the people are being deprived of Cola because of the high prices. Let's cover everybody, except that everyone has to buy Cola". Now that nobody is choosing not to buy Cola (more competition being shunned from the market), what exactly is stopping both Coke and Pepsi raising prices more?
   
   Ok, innersmiff, so what's your point?
   
   Well, apply it to healthcare:
   How can doctor licence-ship, prohibition of selling over state borders and Obamacare not reduce competition and not therefore increase prices?
   
   Those who argue that Obamacare will not raise prices, you're going to have to enlighten me as to the act of God that allows economic law to be overturned. Otherwise, you are arguing that what we need to do is implement cola licence ship, ban selling it over state borders but force everybody to buy it.

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      Dr Billy Kiddposted 10 years agoin reply to this

      I won't get into the economics of it too far. What we're seeing is that healthcare insurance premiums is some states are being reduced (up to 50%) to retain customers. That's because the state healthcare exchanges will have lower prices than what is being charged in some places.
      
      This same model worked with Gieco car insurance. It is licensed under different laws in all 50 states. But the threat of it's lower prices forced other car insurance agencies to cut prices. Mine with All State dropped about 30% from when Gieco came into business.

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         innersmiffposted 10 years agoin reply to this

         Quite so. Companies will not raise prices if another company is waiting to offer the same service lower.

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         innersmiffposted 10 years agoin reply to this

         I think I misunderstood what you were saying, now.

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   innersmiffposted 10 years ago

   I think this is a perfect example to show how big corporations love intervention and regulation. The laws are all there to 'help' people, but the only people benefitting are Coke and Pepsi (the health insurance companies).!

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   PrettyPantherposted 10 years ago

   You left out one very important factor.  Choosing not to buy Coke or Pepsi, or not having it available to buy, has no serious consequence to the consumer.  Not having health insurance can result in serious consequences to the person who doesn't have it, and additional cost to those who do have it if the non-insured person becomes ill or injured and runs up a giant bill. 
   
   If I don't buy Coke, no one has to cover the cost of my lack of Coke drinking.  If you don't buy health insurance, and end up in the hospital with a life-threatening illness which will result in death if you don't have emergency surgery, and you are not able to pay for it out of pocket, someone else foots the bill in the form of higher healthy care and insurance costs.
   
   Unless, of course, you think you should die if you don't have the money to pay.

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      innersmiffposted 10 years agoin reply to this

      Economic laws do not change based on the seriousness of the market in question. Restrict competition in the healthcare market, which is exactly what Obamacare does, and prices will increase. Therefore, on NET, nobody will be seeing more healthcare. The ACA will not succeed in its stated goals - this is fact, and not ideological.
      
      What is the alternative then? Let's go back to the source of the problem: undo doctor licenceship and permit the selling of insurance over state borders. Allow competition to enter the market and see prices fall.

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