26 October 2011
An Old Maxim of Free Market Capitalism Runs Into Government Transperency
Health care insurers in New York are objecting to the state's plan to publish their rate justification documents because they are trade secrets and must not be released to the public. 'Pricing' is one of the most closely held information by vendors in a competitive market.
A good part of the reason for not allowing pricing algorithms, elements of cost and profit margins that a business uses to put a price on its products comes from the 19th Century abuses of capitalism by the "robber barons" and others who formed trusts and interlocking directorates to prevent competition in the markets. The public's reaction to such abuse of free markets resulted in a series of federal anti-trust legislation beginning under Grover Cleveland. After Teddy Roosevelt's progressives left the Republican Party in the 1914 elections, anti-trust legislation did not expand until the Taft-Hartley Act focused on labor in 1948.
I recall, while working for Mobil Oil Corporation in the 1970s, how the corporation put safeguards on its pricing practices similar to the military's Top Secret safeguards. Some of you may recall that Regular grade gasoline sometimes fell to 17¢ per gallon in a price war among dealers in a micro-market. Even with the job title of 'pricing accountant', my authority extended only to compliance and payments according to published price schedules. All pricing policy and price determinations were made at corporate headquarters' equivalent of Langely, VA for government intelligence operations.
To have published the details of pricing retail and wholesale petroleum products would have exposed Mobil and the other petroleum corporations to charges of anti-trust violations. So, I can understand the rationale of the insurance companies in New York. I believe, however, that they will lose in favor of the public's call for transparency in the bureaucracies of government. The issue may result in litigation by the insurers that could cause some significant changes in the private health insurance industry as the companies try to compete when all aspects of their strategies are visible to their customers.
By the way, the November 2011 edition of Money, a publication of CNN, has an excellent and elegant decision-making graphic for choosing the best Medicare options for 2012. [cf. Amanda Gengler and Matthew Hollister (Graphics)"Medicare in America: Special Money Series Part 2 of 3, internet: www.cnnmoney.com, November 2011.] I now have to recalculate my own choice by the December 7, 2011, deadline, but now I know what data I will need to compare plans.
All of this issue would go away, along with an estimated 40 percent of bureaucrat paperwork by every provider of health care, if we had a single-payer system that was not predicated on how poor one is. Just saying….
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A good part of the reason for not allowing pricing algorithms, elements of cost and profit margins that a business uses to put a price on its products comes from the 19th Century abuses of capitalism by the "robber barons" and others who formed trusts and interlocking directorates to prevent competition in the markets. The public's reaction to such abuse of free markets resulted in a series of federal anti-trust legislation beginning under Grover Cleveland. After Teddy Roosevelt's progressives left the Republican Party in the 1914 elections, anti-trust legislation did not expand until the Taft-Hartley Act focused on labor in 1948.
I recall, while working for Mobil Oil Corporation in the 1970s, how the corporation put safeguards on its pricing practices similar to the military's Top Secret safeguards. Some of you may recall that Regular grade gasoline sometimes fell to 17¢ per gallon in a price war among dealers in a micro-market. Even with the job title of 'pricing accountant', my authority extended only to compliance and payments according to published price schedules. All pricing policy and price determinations were made at corporate headquarters' equivalent of Langely, VA for government intelligence operations.
To have published the details of pricing retail and wholesale petroleum products would have exposed Mobil and the other petroleum corporations to charges of anti-trust violations. So, I can understand the rationale of the insurance companies in New York. I believe, however, that they will lose in favor of the public's call for transparency in the bureaucracies of government. The issue may result in litigation by the insurers that could cause some significant changes in the private health insurance industry as the companies try to compete when all aspects of their strategies are visible to their customers.
By the way, the November 2011 edition of Money, a publication of CNN, has an excellent and elegant decision-making graphic for choosing the best Medicare options for 2012. [cf. Amanda Gengler and Matthew Hollister (Graphics)"Medicare in America: Special Money Series Part 2 of 3, internet: www.cnnmoney.com, November 2011.] I now have to recalculate my own choice by the December 7, 2011, deadline, but now I know what data I will need to compare plans.
All of this issue would go away, along with an estimated 40 percent of bureaucrat paperwork by every provider of health care, if we had a single-payer system that was not predicated on how poor one is. Just saying….
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