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Economic argument for single payer health insurance

Do you know why there is only one company to refuse our service area? Or a supplier a single cable? Would it be better to have multiple companies in these industries to increase competition and lower prices for consumers?

The answer to this last question is no. These areas are particularly open to what is known in the field of economics as "natural monopolies" that monopolies exist because they are more effective than competitive markets.

If a society of readers of the garbage truck on a street with 20 houses, but only 5 picks up litter these homes, they face higher average costs than would be the case if picked in the 20. Take all the 20 houses and face to reduce its average costs can be spread consumers through lower prices if the mandate of a governmental authority (that is, by the way). At the same time, the number of trucks throwing pollution and snarling traffic is reduced to a single company the exclusive franchise.

The health insurance industry fits this same mold. An insurance company health is cost effective when you can have a large number of taxpayers, in good health to counteract the unhealthy. More people (and healthy at that) add that the customers, the more they reduce their average costs.

But since the insurance industry is competitive, no company is obliged to pass these costs on average more low for the consumer in the form of lower premiums. And since the demand for health insurance is relatively inelastic (eg, a cigarette smoker), the Consumers continue to bear the burden of higher premiums rather than go without the participation of many consumers can not change insurers compete because they may have pre-existing or to obtain coverage from your employer. No wonder that these Corporate Health insurance providers reap huge profits, like last year 61 billion dollars and point to himself (despite the economic slowdown).

Now I have nothing against companies or individuals reap benefits providing solutions nonprofit is a great motivator. And the price system is an efficient way to allocate the things people want. But by their very nature, the price system requires some consumer will not be able to pay for certain items. For example, if I want a big screen plasma television, but can not pay the price the seller asked: I think not. If enough people do not buy, the price finally reaches a point where few people can afford to buy, but not all. This is a system very efficient in the allocation of almost everything. The question we must ask is "should be the system we use to allocate life-saving health care? Think about this: using the price system to allocate police protection, everyone becomes independent ability to pay. This would be an insult to our police force to protect to suggest that only those who can afford to pay the price. Furthermore, this would be extortion.

A single-payer health care provider can take advantage of insurance the phenomenon of natural monopoly. Each individual working to pay into the system and all Americans are covered. Taxpayers would have wide in good health for this system not only viable, but far less expensive than that offered by private insurers.

Many Americans fear a government to take over the insurance industry disease. But I would wager to guess that many of these same people on the U.S. military as the most powerful in the world despite the government being run. Or they say that our firefighters are the bravest, even if your salary is funded by our taxes. Indeed, businesses have to fire that was once private property: At some point we have seen the flaws inherent in this system and now our fire departments to work for the public good.

When the natural monopoly that has been our electrical system State of California was deregulated in the clumsy attempt to introduce competition, which was a disaster. To ensure that prices are skyrocketing (which is what happens when an individual has broken the monopoly), the state-imposed price caps on companies, in particular, PG & E. Market manipulators like Enron jumped into the gouge supposedly free market and took advantage of the elasticity of demand for electricity that runs our air conditioning. California result has been facing power outages, PG & I finally went bankrupt, and ultimately, taxpayers footed the draft legislation to bail out PG & E. While PG & E, its customers and all taxpayers have suffered during this tumultuous period, ownership of public natural monopoly known as the Los Angeles Department of Water and Power behaved well.

People are so caught up in effort to remain "USA", insisting that they are not what Europeans are doing it because this is not the American way, to lose sight of the election of a greater good and elegant. Nobody calls a takeover of productive resources by the government to destroy America style of life. But if he allows the creation of a single-payer insurance, we will continue to reject a disproportionate share of our income for rich oligopolies that control the most fundamental aspects of our lives: our health. Not only have a single payer, universal health insurance of morals and ethics, it also makes sense economically.

Chris Harmon graduated from Cal Poly with a degree in history and has taught Advanced Placement Microeconomics General Economics and schools in Santa Mary since 1991. He currently works at Pioneer Valley High School and lives in San Luis Obispo. Contact him through econnolly@newtimesslo.com editor.

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