What did he expect? Insurance companies lose money on sick patients. They are in the business of making money. Ergo, it is in their best interest to find a way to not cover people when they get sick. This is a very simple logical fact. It is also one of the LOGICAL DEMONSTRATIONS of why anarcho-capitalism (completely unregulated free market capitalism) does not work.
The idea of the completely free market is a very good one on paper; or rather, it seems like it should be. By pitting companies against each other in the marketplace of the public opinion (which translates into the public's dollars), the poor ones must necessarily fail, and the good ones will do well, which will allow them to hire people (including people form the failures), produce products cheaper, donate more to charity and public good, and generally raise the level of well-being of the society in which they are a part. And even though it leaves a disparity between the best off and the worst off, “a rising tide floats all ships.” Win-win.
That's the idea. But even on paper, it doesn't work. Even on paper, there are variables missing which pollute the idea from the inside. Those variables, along with the problems of practical application of the good aspects, are the reasons why a truly free market cannot work.
The first crack in the free market dam is that of the problem of monopoly. Once a company has passed the economist's “survival of the fittest” test, it is now dominant in its industry and it has resources and a loyal customer base which its potential rivals do not. Therefore the playing field, which initially started level, is now forever skewed. If a small company can still buck the odds and rise up any significant amount, the bigger one has the means to buy the small on out or to squash them before they present a meaningful threat.
In short, after the initial settings of the free market “game” (in the Game Theory sense), the playing field cannot ever be level again. This is why we have developed anti-trust laws against the formation of monopolies. If a company gets too big, it is required by law to break itself apart into competing factions.
This law fails in two blatant respects, and possible more. The first failure of that law is that companies will always break themselves apart in the most profitable way. They won't make the M1 division compete with the M2 division. They will simply tear off the arm that is the R&D department, and then subcontract out to that “new company” for their R&D. Now the company is legally smaller, but with no actual breaking up of the monopoly.
The second major failure of anti-monopoly laws is that there is a limit on how you can prove collusion between companies. If two companies suddenly alter their prices to maximize net profits between the two, but Company A benefits and Company B looses, but Company A sends a check over to B to more than offset that difference, it's pretty clear what's going on. But if the top oh let's say five health insurance companies slowly alter their prices and products and “happen” to meet at a optimal equilibrium, and pay each other in other ways not covered by legal regulation, they haven't broken the law and you cannot prove what their intent was. After all, companies will reach equilibrium naturally on their own. And mathematical models which estimate the time this will take only give probabilities, and the estimates can be a very wide range. It would take centuries and hundred or thousands of companies to even begin to have what might constitute statistical proof. And at what point can you say well there's enough companies that they can't stifle a new startup in that industry, so it's no big deal. It seems intuitively to me that it would be more than five or six.
Maybe they're just getting lucky. Maybe it's just a sign that the American Public is really concerned about their health when the insurance companies are showing record profits during the second worst economic crisis in the history of the United States. But I doubt it.
The second crack in the dam of the free market theory is time. Even if it could be shown that it worked on paper, (which I maintain that once all the variables are in place, it doesn't), it only works in the “long term”. Any good gambler will tell you that the long term is the only term to play for. Even if the short term sucks, you are better overall playing the correct long term strategy. The problem with this implementation into the free marketplace is that the longterm is a minimum of thousands or tens of thousands of years. And almost nobody cares about anything except the next 60 (or less).
If a drug that can cure AIDS is developed by one company, the proper strategy of selling it (or selling anything for that matter) is to sell at a price at which a large percentage of the population cannot afford it. They do a simple calculation which assume X% of people can afford the drug at the price of $Y, do some remedial calculus to find the optimal price, and maximize profit. If they sell more than that, they lose money due to the costs of overproduction; if they sell less, they lose money because they miss out on selling to people who are ready to buy and can afford it—the company is just not producing enough.
With something miraculous like an AIDS cure, this translates into an initial price which is unfathomably high, such that almost nobody can afford it without going into large amounts of debt. This is the right price because these people and their families will generally choose to go into debt if it means prolonging their life or the life of a loved one. It may take decades (or longer) before enough of the cure has gotten around to where the “correct” price is low enough that most people can afford it. And in the meantime, tens of millions of people will die horrible and painful deaths. The time it takes for the market to normalize is far beyond the scope of the individual who needs the drug. He lives and dies for the short term.
Even if it worked on paper, we must play the market for the short term. (And of course there is regulation for this type of thing--but that's my whole point, regulation is very necessary.) This is something the economists don't want to hear. It hurts us overall they cry. If 200 people needed $1 to live out their lives, and 1 person had 700 dollars, and it cost $100 to transfer 200 of his dollars across the population, even though that population is left with a net of $600 (as opposed to the previous 700), that sacrifice and redistribution is worth-while to the population at large. Even if that 1 guy is super pissed.
Now that sounds horrible and communist and blah blah blah, but the fact is that is merely a description of what taxes are. Society needs roads and schools and police and firemen, and somebody has to pay for it. And the guy making $10K a year or less just can't afford his fair share. He may be a drain and you may resent him, but don't you want to live in a society that has a minimum standard for its poor? Or do you not? The problem with those of you who do not is that if you let him die, the “poor” class doesn't go away. They have kids. And even if all the poor people died off, the class structure would simply alter to make somebody else defined as poor.
Hoarding your money doesn't help anybody or fix the problem. It takes that money out of the economy and hurts other people. That's why we have taxes. If you make $10, you have to give away $3 or $4 so that there are roads and police and schools, and if you ever lose your job and have no money, that $3 or $4 that other people pay will help you out. It's about setting a minimum standard of quality of life and being a part of a functional society.
The problem is that even that (horrible communist blah blah blah) way of doing things isn't even what happens. The richest people in the world PAY FAR LESS TAXES THAN THE MIDDLE CLASS. This is because corporate law is setup differently than the laws for people. If you are a person and you make $10, you get $7 in your paycheck, and you have that $7 to spend on food and necessities. If you are a company and you make $10, you buy your food and necessities FIRST, and then you pay taxes on what, if any, is left after you spend that $10. This is actually how the law works. I don't remember what year is was, but it was '05 or after, fairly recently, that Exxon Mobile paid NO TAXES to the U.S. government. (Edit: it was 2009)
As I explained with simple math earlier, if you take and take and take out of the pool that is the economy and don't give any back, THE POOR RUNS DRY.
There are many, many more variables and logical outlines of why unbridled, unregulated capitalism simply cannot work. Myself and other liberals get a rap about hating capitalism, but that's not true. We simply understand that it can only function and be a force for good in the world with tons and tons of regulation. We understand there is a line to be drawn, and that an ungodly amount will prevent innovation and keep companies out of the market, but we recognize that no regulation is also extraordinarily disastrous. Many people, smart people, don't. They haven't thought past the simple model and the fact that the long term is generally the right way to play the game. I like capitalism and recognize it can be a force for innovation and a tide that rises all boats, but facts are facts, and as the Freakonomics authors put it, people respond to incentives.
This is why I was surprised that the newscaster was outraged. What do you expect? This is also why all fundamental rights of man MUST BE SOCIALIZED to an extent. Not entirely, but to an extent.
Socialized health care works. Period. That's a fact. It cannot be disputed. If you disagree, you are wrong plain and simple. Please go look up all the countries in the world with socialized health care, and aggregate their social welfare statistics and length of life. I have done this. Yes, I actually did the research. So until you have, shut it.
Aren't you glad that there are police and roads and schools and on and on? Have you even taken the fucking time to wonder why ALL OF THE BASIC NECESSITIES are either run by the government or have a government component, a public option. You can use UPS and FedEx, but you have the option of using the U.S. Postal Service. You may not like the lines at the post office, but you can't dispute its cost or results. It works. And it works cheaply. Because there is no profit incentive.
Capitalism needs regulation in order to work. It just can't work left to its own devices. Nobody likes giving away their hard earned money, but that's the cost of being a part of society. There are many arguments to be made about how much regulation, but the current system doesn't work (and the system proposed by TV republicans can't work). Of course health insurance companies are going to cancel policies of sick people. Of course companies are going to try to buy lawmakers. Of fucking course. It's in their best interest. The system is fundamentally flawed and needs a complete re-haul. Basic human rights NEED a socialized component. Profit incentives need to be regulated when they interfere with the public good. Long term ideas that royally screw the short term need to be altered even if it is at some long term cost, for the well-being of current society. The fact that the rich have more power to control and buy legislation that helps them is a problem for the rest of society.
I'd be happy to hear ideas and arguments against anything I've said, but I have to be honest: I've been arguing about this sort of thing for years, and not one person has been cognizant of the facts and stayed logically consistent (and kept their position when it differed from mine). I'm open to the possibility though, so let's hear it. But don't expect any respect if you haven't done the research or fail with logic.
