Expecting private companies (especially large ones) with many shareholders, boards of directors, officers and other stakeholders all invested in increasing “profits” to take a long-term strategy and cut prices, decreasing “profits” for the hope of a larger payday in the distant future, on the basis of government incentives and guided by corporate social responsibility, is to put it mildly, wishful thinking. While individuals within the insurance companies may know it is the right thing to do, the institutional bureaucracy and market pressure on these decision-makers is greater in most cases than the external government incentives, and the companies have significant influence over legislators which they can wield to smooth things over when they fail to live up to their promises to create cost-savings for consumers. Simply put, large institutions don’t voluntarily lower their costs; only competition from innovative, low-cost, high-value new entrants and lost sales will encourage competitive pricing in the healthcare insurance marketplace or elsewhere.
Increasing rates are like a boulder barreling downhill. The speed increases at an exponential rate, and there is no stopping the boulder or pushing it back up to the mountaintop once it gathers sufficient steam and reaches far enough downhill. The only mechanism for decreasing costs is increased competition, and increased competition can only occur in a free market without strangling regulation that acts as a barrier to entry.
There can be little doubt that the “Premium Security Act” fund is going to favor institutions and larger market players with lobbying power to the detriment of smaller market players, new entrants, and lower cost providers, further driving oligopoly and reducing competition, which invariably leads to price increases. If I am right, then the rising prices will only reverse course when the boulder runs out of runway and hits the valley, which in the case of escalating healthcare costs – means the bubble bursting, defaults on payments, and structural failure of the system.