"If insurance companies know people will be forced to buy policies, why would they lower premium prices?" Asks eegeterman over Twitter. "Why wouldn't they RAISE prices?"
I've been hearing this a bit today, so let's talk it through. In a world of one private insurance company and an individual mandate, it makes perfect sense. In a world of exchanges, with a dozen competing insurance plans, including national nonprofits, it doesn't.
Article written by Prieur du Plessis, editor of the Investment Postcards from Cape Town blog.Adam Hewison, charting strategist of INO/Market Club, brings you another free edition of his invaluable service of daily technical market updates. These analyses give you an overall perspective of market conditions, highlight a few key movers, and discuss how current events are affecting investment strategy.
Greg Mankiw has an interesting column on the public plan option; you've already seen related points on his blog and on MR.Today I'm interested in a slightly different question, namely the potential benefits of monopsony. Imagine a benevolent single buyer of health care services. Forget about whether or not it could be a government; let's just focus on the logic of the model. I can think of a few scenarios: