Dallas Mavericks owner Mark Cuban says he doesn't support the NBA forcing Donald Sterling to sell the Los Angeles Clippers in the wake of his racism scandal. He called it a "slippery slope" that would set a precedent for the league ousting owners because of their personal views in the future.
"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.
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: