The LIE of passing on costs of insurers to the customer.

[Deep13]

Like many of you, I saw the Lieberman clip on Olbermann last night. Like most of you, I wanted to wipe that smirk off his face. Of the many lies he was telling, the one that stuck out in my mind was the idea that if insurance profits get squeezed by a public option, they will pass those costs onto their rate-payers.

This is false for a simple and basic reason. Prices are not controlled by a company's subjective expectations or even needs. Prices are driven by supply and demand. Right now demand is high as everyone wants coverage, but supply is low since only a few companies are offering insurance and even that is artificially scarce because of all the exclusions insurance companies have. Plus, the exclusion of insurers from antitrust rules further exacerbates the situation.

A public option will create more supply by offering another insurance option. It will reduce demand by giving customers somewhere else to go. As a result, prices can only go down. Granted, the CEO of Aetna won't be making $20M per year, but that's a sacrifice I'm willing to make.

On a personal note, I want to thank Sen. Sherrod Brown (D-OH) for his tireless efforts on this matter.

[RDANGELO]

1. Also

According to price theory, there is a price at which you maximize profits because as you raise the price of a good or service the demand goes down.

[BzaDem]

2. Sorry. There are many Republican economic talking points that are false, but this isn't one of them.

The costs of the excise tax shifts the supply curve. The result is a price incrase to the customer but also a decrease to the insurer's revenue. So both the company and the consumer get hurt. The idea that the tax will only hurt executive pay (or even hurt executive pay much at all) is fantasy. Executive pay is also determined based upon supply and demand.

However, what people seem to be missing is that the whole point of the excise tax on high-cost plans is to raise their price (which discourages their use). People will shift from high-value health plans to more reasonable-value health plans. The CBO scoring shows that most of the revenue from the tax isn't from the tax at all -- it is from a shift from health benefits to income, which results in a higher income tax (and payroll tax for certain people).

[Deep13]

3. 1. I'm talking about a public option, not excise taxes and ...

...2. why would anyone pay the higher rates if they can just go to a competitor (which might be the public option)?

[Deep13]

4. self kick. nt