This blog contains posts and comments written by students in Dr. Tufte's economics classes at Southern Utah University.
11/22/2010
New Rules in Health Care?
Federal rules were issued today as Washington moves forward on Health Care reform. The new regulations are aimed at dictating how insurance companies allocate revenues. Many insurers will now be required to spend more on medical care and less on overhead, expenses, and profits. These regulations could lead to fewer companies in the health care coverage industry. Wouldn't this actually be worse for consumers in the long-run? Less competition in an industry usually leads to fewer available options for consumers and higher prices. To combat this, the government will likely have to take further actions that would eventually lead to a government ran system. Is more regulation really the answer to the Health Care crisis, or is it just another band-aid being created by Washington?
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It’ll be interesting to see if the number of health care providers decreases with these new regulations. Even though some providers’ profitability and reserves are at an all-time high it doesn’t mean that they all are. Some officials fear that carriers will withdraw from the market resulting in fewer choices and less competition. This is a legitimate concern as employers have already said that offering such coverage might end because they may not meet the 80 percent standard next year. I don’t think that the government should be as nearly involved as it is. It’s good that providers will be held accountable for putting premiums towards medical expenses, but some people say that what Washington is doing is a step towards Socialism, which is expensive. Politically the sides don't agree on the issue. One side says that healthcare reform is costing Americans millions, and the other side says that efforts to repeal the health care law “will be taking money right out of the pockets of millions of average Americans." Dr. Tufte, what do you think?
-1 on DSM for grammar.
What do I think Alfred?
I think healthcare insurance is not a business that you invest your retirement portfolio in: returns in this industry are low, and have never really been high.
I also think that it's pretty basic mathematics that imposing more constraints on a system tends to limit its ability to get to good outcomes.
So, this is a plan to take a weak industry, and tie its hands further.
I'm not averse to a whole lot of healthcare reform ideas, but this one is way down the list.
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