Health Care Profits: Wait, What Are Profits?
The common argument for the government to do anything all comes back to the concept of profit. Private businesses invest in “profitable” ventures to make money. The basic argument for government is that it is not the job of the government to profit off of the people. Therefore, if you eliminate profit then you save everyone money.
Most people have argued this about the current health care costs, but Mark Perry over at Carpe Diem shows that the argument is weak, at best:
“Update data are now available for Q4 of 2009, and the Health Care Plan industry (includes Humana, Aetna, WellPoint, Magellan, UnitedhealthGroup, etc.), and the health insurance industry slipped to #88 with a profit margin of 3.4%. Actually, that industry profit margin was boosted by WellPoint’s 18% profit margin for Q4 2009, which was due largely to a one-time sale of its Pharmacy Benefit Management division. Without that sale, WellPoint’s profit margin would have been only 3.9%, the industry average profit margin would have been closer to 3%, and the ranking for the industry would have fallen a few places down to #92.
…
So even if we could strip away 100% of the health insurance industry’s profits, it would only save patients between $100 and 200 per year in health insurance costs.”
But the real question is what is profit and what happens if we were to eliminate them?
Liberty Reads for February 18, 2010
Stand Up to Constitutional Consistency
Conservatism, For Party over Country
Mandating Coverage of Pre-Existing Conditions = Price Controls
Frightening Voters Into Submission
Government Against Capitalists
The Dangers of Monetary Reform
The Economist’s Anarchic Mistake
I am a little behind on my subscription to The Economist magazine, but today I was reading the January 23rd-29th 2010 edition titled “Stop! The backlash against big government.” In their lead editorial they state:
“A further danger consists in equating “smaller” with “better” [government]. As the horrors in Haiti demonstrate, countries need a state of a certain size to work at all; and more government can be good.”
If I remember right, Haiti had a government before the earthquake and now are being governed by the United States military. In fact, some could argue that it was the corrupt government that impoverished the people and prevented them from having more sturdy buildings (the “cement” they used was much cheaper because it was diluted) . After all, they do rank 168th out of 180 on the Corruption Index and 141st out of 179 on the Economic Freedom Index. Read the rest of this entry »
If You Don’t Like It, Move…
The common argument giving to thouse who support a free society, or anarcho-capitalism, is “If you don’t like it move…” Or they may offer you a plane ticket because you want to reform the system completely and not just from the inside. The pro-free market (not anarcho-capitalist) Milton Friedman has an interesting quote on this that I saw over at Free Market Mojo:
“Government power must be dispersed. If government is to exercise power, better in the county than in the state, better in the state than in Washington. If I do not like what my local community does, be it in sewage disposal, or zoning, or schools, I can move to another local community, and though few may take this step, the mere possibility acts as a check. If I do not like what Washington imposes, I have few alternatives in this world of jealous nations.” ~ Milton Friedman, Capitalism and Freedom
Like what Milton Friedman says, the point of anarcho-capitalism and limited government are the same: dispersed decentralized government. Read the rest of this entry »
Liberty Reads for February 17, 2010
Tea Partiers Should Get Serious
The War on Terrorism Becomes a War on Free Speech
Are U.S. Taxpayers Bailing Out Greece?
The Ethics of Adoption in Haiti
Another Government Induced Housing Bubble…
Most of the time when a burglar steals from a house and does not get caught, he doesn’t turn around immediately the next day and steal from it again. And this makes him smarter then the Federal Government.
The Federal Government since day one has blamed the banks and private sector for encouraging loans and giving out money to almost anyone. Even with artificially low interest rates set by the Federal Reserve and George W. Bush taking credit for the housing boom in 2004, the Federal Government denies any mistakes on their part at creating this financial disaster.
Well, without a doubt, the Federal Government is back “not” encouraging loose lending practices reports the New York Times:
“To the extent that the real estate market is functioning at all, people here say, it is doing so only because of the emergency programs, which have pushed down interest rates on mortgages and offered buyers a substantial tax credit.
Equally important is an expanded mortgage insurance program run by the Federal Housing Administration, which encourages private lenders to accept borrowers with small down payments. The government takes the risk of default.”
So basically, the government is using the taxpayer to insure against failing mortgages. Sound familiar? Let’s try the Economist in 2005 Read the rest of this entry »
Relying on Self-Interest
When discussing a free society most people believe that government is necessary for the big three public goods: Defense, Courts, and Police. Most people do not trust competing, self-interested, profit-making companies to protect them. But what they do not realize is that people rely on companies that have exactly those traits daily.
For example, when two cars pass each other going opposite directions with no barrier, what is it that stops them from running head-on into the other?
Is it because it is illegal? Nope. No person wakes up in the morning and wishes that they could run head-on into another car but decides not to on the margin because it is illegal.
The reason why the two cars can safely pass each other without problem is because both of them are pursuing their self-interest. It is not in the best interest of either driver to run head-on into the other.
Liberty Reads for February 16, 2010
Congressional Black Caucus Rolling in Green
Stopping the “Corporate Takeover” of Politics, One Corporate-Funded Gala At a Time
Does It Make Sense to Resurrect the Glass-Steagall Act?
Washington Is Booming in the Bush-Obama Years
Sowing and Reaping Devastation in Haiti
(H/T to Don Boudreaux from Cafe Hayek for the Stossel Crony Capitalism video)
Early 20th Century Railways and Today’s Health Care Problems
Currently, I am reading a great book Blood, Iron, and Gold: How the Railroads Transformed the World by Christian Wolmar. So what can railroad policies in Europe tell us about health care policies today?
Take a look at these excerpts:
“Just as in similar periods of railway mania elsewhere, the speculators soon piled in, promoting lines that had no economic rationale but nevertheless attracted state subsidy…”
“The difficult relationship between the state and the railways in France was therefore mirrored in Italy… In the forty years after [italian] unification, there would be a railway crisis every decade in Italy, and all of them had their rots in the fundamental lack of viability of the rail network. Invariably, each of these crises was followed by legislation to try to sort out the mess, and ultimately the result was the full nationalization of the system in 1905.”
In other words, the state interfered and saw Railways as a right for their country. In doing so, the people believed that it was their right to have rail run to their little town. It did not matter to them whether it was economical or not because the cost was being spread out to the rest of the country, while the benefit was only coming to the small town.
Put this in today’s health care debate and you can see clear similarities.
