Warren is the Democratic front-runner at 29 cents to Biden’s 27 cents on Predictit. This socialist/fascist/anti-capitalist/totalitarian again caught my attention with her clearly-expressed view of business:
“Look at the business model of an insurance company. It’s to bring in as many dollars as they can in premiums and to pay out as few dollars as possible for your health care. That leaves families with rising premiums, rising copays, and fighting with insurance companies to try to get the health care that their doctors say that they and their children need. Medicare for All solves that problem.”
Warren understands competition in politics, but she’s completely blind to competition in the insurance business and other business markets. No wonder she’s an anti-capitalist socialist. She is clueless as to how free markets or business competition work. Does the dimwitted Warren not know that capitalism is what puts bread on the table and a television set in both the living room and bedroom at prices so low that almost everyone can afford them?
According to Warren’s inverted understanding, Toyota wants to charge the most it can for a car and produce one with the lowest costs (and quality) it can. And she thinks that this process in markets results in rising prices and fighting with companies to get the cars, bread and television sets people think they and their children need.
In Warren’s world, there is no competition. There is only one-sided market power of producers. They make excess returns, and the government must step in to undo the defects of the market. Warren’s concept has no dynamics of competition; it’s a completely static view of one company versus the consumer. This kind of limited concept is why Warren over and over and over reveals to us that she’s a communist and an ignorant socialist. It seems that Warren has absorbed her John Kenneth Galbraith or his Marxist progeny in universities.
Not only that, Warren would not be the least bit reluctant to impose her vision on all of us. She is a totalitarian, which goes along with the communist-socialist turf.
An insurance company’s premiums are its PRICE. Its payouts on claims are one of its COSTS. It’s true that the company wants to charge the highest price it can, but if it tried to, it would run into lower demand from buyers and the competition of other insurers to gain any excess return that a higher price may generate. So, the company cannot charge just any old price it wants to and stick to it, not if it wishes to stay in business. Competition from other insurers causes the level of premiums (the price) to fall to a level that provides a competitive return, one that covers costs and allows for a competitive return on capital.
Those dirty old insurers want to charge the highest premiums they can, says Warren. Such greedy scoundrels they are, she says. She completely omits the fact that they compete with one another. If they do not compete, or do not compete as much as they could and should, it’s because the government has prevented it, in which case the remedy is obvious; and it’s not government-run medicine as in Medicare for All. It’s the opposite.
As for costs, the company can charge lower premiums by controlling its costs and not making payouts it shouldn’t be making. Controlling costs is a good thing, not a bad thing. There are a lot of ways for an insurer to make excessive payouts, such as by paying excessive medical fees, paying off on fraudulent claims, and writing policies for people whose future claims may be higher than premiums will cover. Paying out fewer dollars is an essential part of the business.
But Warren makes the companies sound evil for wanting to lower their payouts. She again omits the fact that they compete with one another. If a company’s payments for a broken leg are too low, insurance buyers will find themselves flooded with offers from other plans that have higher payouts. A given company cannot be too stingy on payouts without losing business, which means buyers migrate to insurers offering higher payouts.
There is a circumstance under which some people will find premiums and co-pays higher. It’s when they are at higher risk of collecting on the policy, that is, when they have medical conditions or circumstances that indicate they will have serious medical conditions that will cost a lot of money. And if government regulation has fixed premium prices or disallowed charging higher prices for more serious conditions, then they will experience rationing and be scrambling to find an insurer. This rationing would not occur in a free market. In this case, the solution is to remove government regulation and price fixing.
The quotation from Warren shows clearly that she thinks market competition is a bad thing that creates higher prices and lower quality. Warren is touted to be an intellectual who has tapped into academic sources of ideas. Yes, bad ideas. Academia is loaded with economics professors with idiotic ideas. Warren has accessed people whose ideas she’s comfortable with. She’s responsible for her own socialist/communist idiocy, like believing that competition in markets for economic goods is a bad thing.
One day we have Sanders wanting to nationalize the entire energy industry. The next day we have Warren filling in the details of her plan to nationalize the health care sector. Who needs Vladimir Lenin, Joseph Stalin, Mao Zedong, Fidel Castro or Alexandria Ocasio-Cortez when we have Elizabeth Warren?7:59 pm on August 24, 2019 Email Michael S. Rozeff