As a believer that market forces are better at serving consumers than are government regulators, I found de-regulation one of the most challenging issues while I served in the Colorado Senate.
When government intervenes, it always tilts the playing field. Sometimes it does this for ostensibly good reasons – most notably to provide all Coloradans with electricity and telephone service as was done predominately in the first half of the 20th century.
But decades later, de-regulating those areas in order to promote competition turned out to be more complicated than just repealing old statutes. Technology ultimately made local telephone monopolies obsolete, but before that happened, fights over bills to allow local competition were cutthroat.
Would the heirs of the Mountain Bell (US West, Qwest and CenturyLink) be required to give its competitors unfettered access to its facilities? Clearly, competitors couldn’t compete if they had to first install their own telephone wires across every community.
The existing system was constructed with subsidies and Mountain Bell given a monopoly in order to make service widely available. That gave Mountain Bell an advantage, largely financed by government or through taxes on phone service. Mountain Bell’s would-be competitors wanted access to that subsidized system. However, Mountain Bell remained responsible for maintaining that system, so it wanted to charge its competitors for access. That left the question of what constituted a fair charge. Mountain Bell wanted to charge relatively more; its competitors wanted to pay relatively less. Legislators had no way to know what was fair or who – if anybody – was telling the truth.
Re-introducing competition in the health care market faces different but similar hurdles. The number of health insurers has dwindled, and those that remain have some inherent advantages (more money, large numbers of existing customers) on new upstarts. But they’re also burdened by the bureaucracy and inflexibility that makes large corporations want to preserve the status quo rather than adapt to something new.
The more complicated challenge is what to do with the people who have benefitted from ObamaCare. This is both an economic question (how to create an replacement that functions well and doesn’t increase costs) and a political question (how to make the transition simple so it doesn’t turn frustrated consumers into voters for your political opponent).
ObamaCare’s goal was to get more people insured, mostly through government programs, to help reduce the amount of unpaid health care given to people who didn’t have insurance and were unable to pay.
A truly free-market system would require not require anyone to purchase insurance, not require insurers to cover pre-existing conditions, and not require doctors or hospitals to serve people who can’t pay for care. If you don’t understand why two of those three are political losers in today’s America, then you are politically tone deaf.
The takeaway is this: Markets thrive with no government interference. Once government becomes involved (regardless of the reason), restoring genuine competition is a tedious process.
4 Thoughts on “Restoring market forces isn’t as simple as repealing old laws”
Interesting article. I wish the phone company had never been de-regulated. Those who complained when Mountain Bell was in charge, should not have persuaded politicians to allow “competition”, which actually became “confusion and inefficiency”. Every home in America should be required to have a land line. Its a matter of public safety because in a time of national emergency being able to communicate via a reliable land-line system could be essential to national welfare. Cell phones are great, but they are not as reliable as land lines, and they too should be regulated by a single carrier–monopoly for the sake of public service. And, concerning healthcare, I am one of those politically tone deaf folks who long for the days when everyone paid for their own medical care. We have created a bureaucratic monster of a healthcare system which threatens to strangle the life out of the entire industry. No one is entitled to anything they’re unable to pay for. When the expectation of entitlement began to creep its way into the system we opened a can of worms from which we may never recover, barring some kind of national catastrophe. We need, even if politically difficult, to re-establish a system in which each patient is responsible for payment, insurance companies deal directly with patients not providers, those unable to pay are turned away or referred to a benevolent third party, and the well-being of the system itself takes priority over the individual patient. Otherwise, we will have second-rate healthcare for everyone, and truly top-notch healthcare for no-one.
Randy, I sympathize with you! I’d prefer to pay for my own health care w/o insurance – and do as often as possible. But for the folks who’ve become addicted to health insurance as a government-coerced health financing system, weaning them from that system is a tall order. I hope I’m wrong, but it’s probably not “on the menu” of what is politically possible and palatable.
I understand. I think our system of education, and perhaps more so the parents of children, has miserably failed to teach young people about free markets and why they’re superior to socialism, (not that TOTALLY free markets truly exist). As a result we have created the entitlement generation(s).
Your points of views are greatly appreciated. Are you running for governor? What are your plans for the future? Thank you for your articles.
Eva M. Mitchell
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