Anthem is robo-calling enrollees to kvetch about health plan price hikes of up to 39%. Then they’re asking these customers whether they plan to dis-enroll — that is, to quit their health plan enrollment. The move would impact as many as 700,000 health citizens in California.
Let me take you back to your freshman economics class (and if you didn’t take that class, let me enlighten you on the 101 version) of “the market.”
A perfect market, Samuelson told us in his standard Econ 101 text, was dependent on:
- Lots of buyers and lots of sellers
- No-cost entry and no exit barriers
- Perfect information, where prices and quality of products are known to all buyers and all sellers
- Homogeneous products, that is that the product for sales from one seller is near-identical to that from another seller
- No costs incurred when making a purchase/sale.
And of course, sellers seek to maximize profits in perfect markets.
Health Populi’s Hot Points: If there’s a picture to include next to the Webster’s Dictionary definition of “imperfect market,” it’s of an uninsured American health citizen seeking health insurance on the individual market. This is, more often than not, a “no-go” proposition.
You can tick off most of the prerequisites for a perfect market – lots of sellers, free entry/exit, perfect and free-flowing information, etc. – when it comes to the sale and purchase of health insurance in the U.S. We’ve got monopoly and oligopoly supply sides in regional markets. There’s not even close to free-flowing, easy-to-understand information on policies or quality or clear pricing relative to the value-proposition of the individual health policy.
Of course, sellers – health plans – do indeed seek to maximize profits. That’s their promise to shareholders.
There is indeed something perfect about this scenario: it’s the perfect argument for health reform, and for a public option, in particular. If traditional health plans were keen to construct a simple, low-cost health insurance plan by now, they would have done so by now. The scene is ripe for disruptive innovation.