Jan 8 2013
1. Suppose you lived in a society with a massive, age-old injustice. Think slavery. Are you the kind of person who would staunchly oppose this injustice anyway?2. Suppose a colorful, feel-good movement advocating a massive, new injustice suddenly became fashionable. Think communism. Are you the ...
Jan 8 2013
When economists say "wage rigidity," they almost always mean downward wage rigidity. Nominal wages almost never come down. Yet in W. Somerset Maugham's Of Human Bondage, set in late 19th-century England, upward wage rigidity plays an interesting role in the plot. Maugham's twist on behavioral labor ec...
Jan 7 2013
In the 1990's and 2000's, as more violent criminals were thrown into prison and, partly for that reason, violent crime rates fell, the media had a wave of stories with titles like this: "Despite falling crime rate, prison populations rise."In 2010's, we'll see more stories with titles like the one below. The...
READER COMMENTS
Doug
Jan 8 2013 at 12:58am
Central planning distorts the market, color me shocked!
If centrally set prices, standards and quotas didn’t work for the Soviet car industry why does anyone in their right mind believe it will work for the American healthcare industry.
BD
Jan 8 2013 at 2:09am
Bad analogy. Unlike car dealers, health insurers are legally required to use the rates that are filed (no customer-level discretionary discounting permitted), so they have an incentive to file rates equal to the market price they want/need.
BD
Jan 8 2013 at 2:28am
My last comment is not really complete. Insurers do have customer-level pricing discretion via medical underwriting, although that could be significantly limited (or nonexistent) depending on which state you are in and whether it is small group or individual insurance. Either way, there is a very strong correlation between filed rates and market prices that insurers are locked into, so the car dealer analogy is still bad.
More broadly, you are spot on in the “sweet naivete” of the headline and the article.
Of note, the article ignores the fact that while the Affordable Care Act requires insurance companies to file rates “for review,” it doesn’t actually give regulators any new authority to disapprove the rates. Many states of course have this authority now. But from a federal legislation perspective, this article basically professes surprise that a toothless, show-trial rate review exercise — layered on top of a new law that increases insurance companies’ costs and risk — hasn’t had an impact in lowering rates.
Lee Waaks
Jan 8 2013 at 12:28pm
@Doug:
Why do they think it will work? Because they are ignorant. If they are not ignorant and know it will not work, they know the market will be blamed and have helped pave the way for single-payer insurance. But they are still ignorant if they think single-payer will work (defined as increased want satisfaction without proactive impositions [J.C. Lester’s term]). Laissez-faire is anathema to those who are attracted to managing mankind’s economic affairs, even if it is socialism writ small, e.g. Sweden.
mark
Jan 8 2013 at 3:45pm
My favorite line in that article was the one that said costs would go up “just” 7.5% in 2013.
DCPI
Jan 9 2013 at 12:07am
Garrett:
The reporter is likely 50 years old. See
http://topics.nytimes.com/top/reference/timestopics/people/a/reed_abelson/index.html
Doubt the headline writer is much younger. No one fresh from college need be involved.
Methinks
Jan 9 2013 at 10:06am
…costs would go up “just” 7.5% in 2013.
Was this not the tragic rate of increase that justified Oblundercare in the first place? I guess the cost curve is bending the other way. What a surprise.
LDoubt the headline writer is much younger. No one fresh from college need be involved.
Which just makes it even worse. Middle-aged children indulging in fantasy. Great.
Comments are closed.