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Flat Screen TVs and Health Insurance

I can’t help but marvel.

I paid $4600 for my 45 inch flat panel TV in 2005.  Now, in 2010, the comparable model is $1500.  It’s remarkable that the cost of this product dropped $3100 … even after inflation.

Since there are more than a half dozen competitors making flat screen TVs – Sanyo, Pioneer, Panasonic – they all are locked in a competition to get you to buy their product instead of the product of their competitors.  This competition consists of inducing consumers with price, features, availability, ease of use, reliability, and brand recognition.

This competition between flat screen TV manufacturers results in a win-win situation for everyone.  Manufacturers, distributors and dealers can all make a profit; jobs are created; consumers get a product they want at the best price.

You may agree that capitalistic free market forces are great in that they got me my TV, but could the same competitive forces bring the down the price of health insurance?

The answer is an unequivocal “yes”!  An even bigger question is how can we make the marketplace of health insurance behave more like the market for flat screen TV’s?  Here are some suggestions:

1.  Allow more health insurance providers into more markets.

Right now Samsung, Panasonic, Sony, etc, are not restricted in marketing and selling in any state.  In contrast, health insurance companies are diversely regulated by individual states.  Additionally, the McCarran-Ferguson Act of 1945 exempts insurance companies from anti-trust lawsuits.  If health insurance companies were treated just like other corporations, they would not have to be subject to the multifarious regulations of the states.  They would merely be subject to the regulation of the state in which they are incorporated and they would be free to sell policies in any state.

The answer to opening health insurance markets is to firstly subject health insurers only to the regulations of the state in which they are incorporated.  Secondly, to repeal McCarran Ferguson to allow health insurers to be regulated under anti-trust laws.

2.  Remove government and politicians from being involved.

The minute one gives a politician decision making ability within a transaction, is the same minute you increase the price of that item.

What if “Company A” wanted to sell an add-on gadget to your TV, such as a cup holder or an automatic screen wiper?  If Company A could coax a politician into mandating that gadget on all flat screen TV’s, Company A would then make money.  Company A could employ various schemes to convince said politician to do so … like giving generous campaign donations or building a factory in the politician’s state.  The problem is that the TV manufacturer would then have to increase the price of his TV because the politician mandated that all TVs be made with the gadget.

It is better to keep the politician out of the process entirely.  If consumers wanted a cup holder, one of the TV manufacturers would add it anyway to increase his sales over the other TV manufacturers.

In one day, voters could wipe out the population of health insurance lobbyists in Washington D.C. … just by taking the decision-making ability away from politicians.

3.  Make Cost Transparent to the Consumer

Isn’t it great to go to an online price comparison website to find the lowest flat panel TV price?

One way the government would actually help is to make all insurance companies post their policy prices on a central industry website.  The website could include check boxes for additional riders for such optional treatments like obstetrics or chiropractics or fertility treatment.  All consumers would then be able to compare like policy costs side-by-side.  This would be great motivation for competitive policy pricing.

Another feature on this website could be a consumer rating system like you see on eBay.  The insurance company that treats their customers bad would receive the lower rating and would not be able to stay in business long.

These are just three suggestions.  I would welcome any other innovative market driven ideas.
Sadly, the recently passed Health Insurance bill was a giant step backwards in all these departments.  It is extremely unfortunate that none of the above options were tried prior to this “nuclear option”.  To congress’ credit, an attempt was made to repeal McCarran-Ferguson, but the health insurance lobby was just too tempting for them.  To reiterate, however:  Repealing McCarran-Ferguson will have no effect on competition until states drop their varied insurance regulations.

Free Market Capitalism has not just caused flat screen TVs to be cheap.  It has made America strong enough to oppose conquering nations like Nazi Germany, Imperial Japan, and Stalinist Russia.  Capitalism has propelled our nation to be the world’s primary innovators in food production and pharmaceutical research.  Capitalism has enabled our population to have the highest standard of living on earth.  Additionally, no other people in the world come close to Americans in the area of individual charity.  Americans are the greatest givers the planet has ever known.

For these, and many other reasons, Capitalism should not be seen as a failure, or as a dirty word, or as unbiblical, or as anti-Jesus.

Capitalism has indeed helped the United States and many other countries to carry out the mandates of Jesus Christ much more effectively.  Americans have saved many souls in the world by delivering the Gospel of Jesus Christ … and Americans have saved many lives in the world by being capitalist.

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