Wednesday, April 07, 2010

SHERMICHAEL SINGLETON OP-ED:The Importance of a Free Enterprise Health Care Market

By Shermichael Singleton

The greatest accomplishments in civilization came from the private sector, not the government. Governments’ ability to manipulate the system and markets for political self-interest—have been the downfall of some of the worlds greatest societies, look through history and you will find everything that was and has been controlled by government eventually comes to an end.

The U.S. government sweeping health care reform—severely limits and cripples the free enterprise system, instead of making the industry more competitive, government chose to take it over. By basically controlling every major fractions of the health care system, it limits the abilities of the private market to compete against one another which would lower cost.

It won’t be contested that the market was in major trouble, however the proper course of action should have called for more and better competition. The current market is basically monopolized by a few major insurance giants who seem to control the markets, which makes it extremely difficult for other companies to lower cost. The more entities that are able to compete, the better opportunity the consumer has to purchase coverage at a lower cost.

There are many insurance companies however the major companies dominate the market, hindering free enterprise. This ascendancy over the market, severely limits the ability of smaller companies to compete, lowering cost isn’t an option in this situation. However if you have a system that promotes fair competition, rather than government control or monopolization, the more companies that are able to compete the more likely prices are to drop. The competition the market has, the more likely companies are likely to lower cost as much as they can to compete with lowering cost from other insurers, making it more economical for the consumer.

Government does have a role and at times should step in merely as a referee—to assure markets remain as competitive as possible, a competitive market is good for the consumer and good for the economy. Look at countries today that are controlled by governments and you will see, nothing good comes from government because the markets are manipulated for the self-interest of government leaders. Milton Friedman said it best when he stated, “nobody’s going to take care of somebody else’s property as well as they’ll take care of his own.”

What the government is attempting to do with the health care market is create a competitive market by making it nearly impossible to influence price. This is the incorrect way to go about correcting this problem,usually higher prices means you sell nothing or you sell less and at extremely lower prices companies are just throwing money away, which is why companies must found that ‘grey’ area or in other words they must find that balance. However when you have a few major companies dominating the market, it is very easy for them to raise prices because they know smaller companies won’t be able to compete, which means the consumer virtually has no other choice but to buy from the companies with the higher prices. In economic theory, any company that is a price maker is a monopolist.

In this case government should step in to regulate the markets but keep in mind when government steps in, there’s going to be a tax attached. The only way markets can truly be competitive is if no one can influence price.

The best way for the U.S. to fix the out of control cost in the health market is by allowing across state line purchase of health care and assuring the markets remain competitive…not allowing major companies to make the market difficult for smaller firms to compete. the more choices the consumer has to choose from the lower the cost will be.

Free enterprise is the best way markets should be ran, government’s only job is to referee from time to time, not to take over and control. I can’t stress how important it is that the market is competitive, competitiveness is the only way to assure, a market that is fair to all concerned. The major health care reform recently signed by President Obama is a step in the wrong direction for the country, this will only make the market worse over time.

As I mentioned earlier everything government does has a tax attached to it, meaning more money is going to come from the American people, versus following a free market which allows the consumer to chose where their money is spent versus being told where it can be spent it by the government.

Shermichael Singleton is the co-founder and spokesperson of the College Republican Chapter at Morehouse college. He is a Political Science Major, who’s currently running for Georgia Association of College Republicans (GACR) Chair.

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1 comment:

Anonymous said...


Thoughtful article.
Free enterprise is a great source of accomplishments, but lets not forget that public institutions like Nasa, and Darpa are everyday revolutionizing our life (GPS, internet, defence technologies, man on the moon,..). We do have a capable system that we need to leverage if we can. Free enterprise works because competition forces better service and because better service equals more customers.

Utilities have horribly got it wrong on this equation. Despite the opening up of electricity for example - there really isnt much competition in most places (it free enterprise, but only one company). Health care is a disruptive element in American society and I dont say this lightly - I'm originally from another country and really dont think left or right or Republican or Democrat - Its surprising that I pay so much tax and so much for health insurance, but get so little in return. Most people I know wait-out a fever or a minor cut till it gets worse before getting to a doctor - and its because of costs. Even 20 tablets of Amoxicillin (antiobiotic) cost $100! You can bet that the whole world is dead if that was the true price for a simple antibiotic.

Again, I'm not trying to pick a side or demean another - I truly understand how people supporting free enterprise in healthcare honestly want the best for everyone and their own family and friends, but part of the fear of a government hand is that that people have grown up with this system. I suspect that terrible example of govt. run healthcare in other countries is a contributing factor. In reality, every system will have bad stories (even us here), but I'd want that everybody here gets good health care and if the government happens to be a player that ups the competition, we may all be better off.

Again, free enterprise itself isnt the cure for everything. Its the characteristics of free-enterprise (competition, better service, efficiency, etc) that have spin-off benefits for society. However, the healthcare system as it is right now isnt functioning that way - rather they have a claque that benefits in higher prices (if you have a 10% deductible - then its in the interest of the insurance companies to have higher costs). Somehow the rules of the game are free-enterprise or capitalistic in healthcare - they are monopolistic and a little shy of price-fixing.

What do you think?