Patience, I'll get there....
My wife Erin is reading Methland, Nick Reding's account of the destruction wrought by methamphetamine in rural America. Reding connects the increase in meth use to the consolidation wrought by Big Ag (see also commentary by Patrick Deneen).
Over buffalo burgers last night (yes, we live well), Erin explained how Reding also manages to work Karl Marx's critique of Adam Smith into the argument:
Smith's capitalism depends on lots of small actors in the market, none of whom individually can wield enough influence to skew prices... or to unduly influence the government that regulates the market. The "Invisible Hand" is invisible because it is the product of umpteen Main Streets, not one Wall Street. The Invisible Hand doesn't require much regulation, since real competition is a pretty good check on individual power.
But Marx says the market's mandate to "grow or die" means all those competing actors start cannibalizing each other. Capital consolidates, and the Invisible Hand becomes visible: we can identify a few big firms that dominate the market, unduly influence prices, and (worst of all) mingle and merge with government just when we need government more to check the power of these growing gargantua.
And then I thought about health insurance. The Invisible Hand cannot work in health insurance. Thousands of tiny firms would have thousands of tiny risk pools that couldn't cover their costs, espcially not when we're talking the high costs of modern medicine. Insurance depends on spreading the risk; the bigger your pool, the better you spread the risk. Insurers have to eat each other—grow or die. That's why health insurance now lacks competition. It doesn't require an evil plot (though you can argue that); it just requires insurers to act exactly as Marx said they would. Consolidate, get big, control the government with lobbyists.
The conservatives opposing health coverage reform by chanting "Let the market solve" assume that Adam Smith's principles still apply. But the free market can't work in health insurance. There is no Invisible Hand, only big Visible Fists like Aetna and Cigna.
The only way you check the power of those big actors in the market is through stronger government intervention. Uncle Sam Insurance offered as an option alongside private insurance might help, but Marx's critique strengthens my belief that, in health insurance, the best solution is to carry the logic of consolidation to its inevitable conclusion: combine everyone into one nationwide risk pool, a single-payer system for all Americans.
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