All Your Prices Are Belong To Us

If runaway costs are the problem, surely price controls are the answer!  Barack Obama, channeling his inner Dick Nixon, is set to propose Federal oversight of health insurance price hikes.

Since in the short run there are generally more consumers who can picture themselves winning from this than suppliers who will see themselves as losers, this tactic may help get Obama and the Democrats get past 2010.  I'll bet that rent controls were popular when they were adopted in New York City as a temporary measure during World War II.

The long run effects won't be helpful for the insurance industry but they will be good for advancing the interests of the Democratic Party.  A key Democratic goal of health reform (as was kicked around during the HillaryCare debacle) is to create a new middle-class entitlement.  If this plays out like Social Security it will tie the middle class to their benefactors in the Democratic Party, which will forever position itself as the party of more generous benefits paid for by Someone Else.

A price control board can advance that same goal, since the Democrats can position themselves as the champions of lower prices for all. In the not-so-long run insurer won't be able to make a reasonable profit and will exit the industry, and coverage will be scarce (but cheap!).  At that point the collapse of the private market will be offered as further evidence of the desirability of a full government take-over of health care, or at least, the adoption of a stalking-goat "public option".

Oh, well - if price controls are the answer, I guess we have to stop comparing Obama to Carter and start comparing him to Nixon.

Comments

[Captain Hate]

Wage and price controls; those worked out well.

[Tollhouse]

It'll work this time. We have our TOP MEN working on it.

[narciso]

I'm sure it will he handled with all the delicacy of this move, in the LUN

[Mope over Mopar.]

OK, Fords and Toyotas only now, n.
======================

[DC]

My power company has had price controls for decades -- and there's never been a want for power as a result.

[Extraneus]

Good point, DC. If only we can force the health insurers to become monopolies in their respective states, we can regulate them as utilities!

[DC]

Ha, Ha! Not a necessary condition.

[Ranger]

Ah yes, the Illinoisification of the Federal Government. In Illinois any major economic acitivity has a state board that overseas it. If you want to do anything significant, it requries the boards concent. A nice, $150,000 a year job for a few days of work. And guess who gets to pick who sits on the cost control boards? The president of course. So, who winds of getting these jobs? Well connected Dem pols and big campaign contributors (or their family members).

And Obama knows all about this sort of thing. After working hand in hand with Rahm to get Blago into the governors seat, Obama was the lead in the state senate in getting the hospital building board expanded from 5 to 9 members, so Blago could pack it with his own people, and esure that anyone who wanted to build a hospital had to caugh up big $$$$ to Blago's campaign fund.

[Tom Bowler]

Oh, well - if price controls are the answer, I guess we have to stop comparing Obama to Carter and start comparing him to Nixon.

I think it's mistake to let Carter off the hook so easily, TM. We were lining up at the gas stations in 1978 because Carter favored keeping price controls on oil.

Isn't it amazing me how these bad ideas just never seem to go away.

[DC]

If it results in lower monthly bills, then I don't care if a democrat is on the board. I don't care how it happens politically. Deliver me the services at a reasonable price, full stop.

[Cecil Turner]

Hey, if we get price controls we can stop those obscene profits the health insurance companies are making, reduce them to the levels of public utilities, and bank the difference!

[er, what's that? really? only 3.4 percent? and that's less than utilities . . . er . . .] Never mind.

Hey, how's that tort reform thing goin'?

[DC]

Gee, what's the median level profit for industry, Cecil?

[Rob Crawford]

My power company has had price controls for decades -- and there's never been a want for power as a result.

You don't live in California, do you?

[Ranger]

If it results in lower monthly bills, then I don't care if a democrat is on the board. I don't care how it happens politically. Deliver me the services at a reasonable price, full stop.

Posted by: DC | February 22, 2010 at 09:09 AM

This is exactly what they are counting on. You don't care how corrupt the system is as long as you get yours. I'm sure you didn't care about all the Democrats on the board at Fannie Mae and Freddie Mac either as long as your property values were going up. Now that Fannie Mae and Freddie Mac have blown up the entire housing market and you're under water on your mortgage, you might care a little.

This is why Illinois is $13 Billion in debt right now, with no way to close the budget gap in sight. But I'm sure the same problems would never happen at the Federal level with a group of Illinois Democrats running the country.

[DC]

Enron caused the problem in your state, Rob.

[Rick Ballard]

Health care insurance as a product has the same uniformity as a kWh or a cubic foot of NG?

Amazing.

[narciso]

No, a terribly 'clever by half' legislative scheme, enabled Enron to do what it did

[DC]

Must it, Rick? What is your point?

[Cecil Turner]

Enron caused the problem in your state, Rob.

Bwaahaa! Yeah, capping monthly bills (your standard, I believe) and leaving wholesale costs unregulated had nothing to do with it, eh?

And I'm not sure what the margins are, but health insurance ranks 86 or so.

But even an uneducated look at this suggests you can get three times as much savings from tort reform as you can from price controls. So why no discussion about that? Could it be that your hero ain't too serious about it?

[Rick Ballard]

What's yours, DC? MA, NJ and NY all have wondrous regulatory structures regarding what must be covered by insurance carriers, with premiums reflecting the idiocy of the level of legislative involvement in setting "product standards". I have no desire to try a "one size fits all" policy determined by either legislators or regulators. The price variance on kWh is well over 100% and is wholly dependent upon legislative whim. Why would health care be any different?

[DC]

Cecil, the "median profit" for all industry is found in the article you originally linked. That you assume "capping monthly bills" is how a regulated industry actually works demonstrates that you are in need of more education on the subject.

[Jim Ryan]

I'm tellin' you NRA, people. National Recovery Act. Try it again, it'll work this time. Let government and big corporations cooperate in fixing prices and wages.

First we get politicians to make speeches about sticking up for the working stiff against corporations. Then, they and the corporations grease each other and stick it to the working stiff with a centrally planned economy. It works every time.

[DC]

And yes, tort reform is ALSO a fabulous idea. Don't let ideology get in the way of good ideas, is the subtext to the reason I'm bothering to post here. All of us need to work together to address the ails of the country we love.

[Pofarmer]

If it results in lower monthly bills, then I don't care if a democrat is on the board. I don't care how it happens politically. Deliver me the services at a reasonable price, full stop.

There's a free lunch comin' I can just FEEL it!

FWIW, the State of MO is considering forcing insurers to cover all kids with Autism. Insurance companies promptly announced it would increase insurance rates by up to 30% or so.

Mandate coverage for everything, and you make everybodies coverage more expensive.

FWIW, there are two power delivery structures in MO. The Rural Electric Coops are unregulated, except by their boards and customers. Ameren UE is regulated by a Public Utilities Commission. Want to guess who has the lower rates?

[Captain Hate]

I think it's mistake to let Carter off the hook so easily, TM. We were lining up at the gas stations in 1978 because Carter favored keeping price controls on oil.

I'm loath to say anything positive about Dhimmi Earl, who I hate with the heat of a thousand suns, but the only gas lines I remember were in the DC area around 73 and early 74 when Nixon was in charge. I moved to the Cleveland area in the summer of 74 and honestly don't remember a single gas line.

[Jim Ryan]

the reason I'm bothering to post here

Thank you so much for deigning to post here, your highness.

[Rick Ballard]

CH,

The Peanut did sign the Humphrey–Hawkins Full Employment Act, which was the (D)irty socialist central planning lodestone of his time.

Just think how happy Peanut must be to know that there is definitely competition now for his position of Worst President in a Hundred Years.

[Old Lurker]

"I'm loath to say anything positive about Dhimmi Earl, "

Swap that comma for a period and delete the rest of the post.

Fixed, Cap'n.

[Obama is what ails us now.]

DC, with guvmint healthcare, the ails of the country we love will multiply.
==================================

[Captain Hate]

Rick, I'm not taking that sanctimonious moron off the hot seat for the garbage he was responsible for. Like signing the CRA. But yes, the only manmade warming is the heating up of the competition between Toonces and Adultery-of-the-heart in the race to the bottom.

[Sue]

Don't be surprised to find DC is Sylvia.

[Clarice]

Tie it to price controls on lawyers, especially tort lawyers.

[Sue]

Don't be surprised if DC is Sylvia.

[Captain Hate]

No, a terribly 'clever by half' legislative scheme, enabled Enron to do what it did

I know that it's difficult to get a truly objective view on this but what are the thoughts of where the blame for the California meltdown *really* belonged between Enron and Grey Davis? Having worked for almost 20 years for an electric utility (don't hold that against me, please) I knew some people that worked for Enron and they weren't complete idiots.

[Pofarmer]

Let's see, one reason that the insurance industry got so screwed up in the first place, is because of wage controls in and shortly after WWII. Yeah, let's try more of that, what could go wrong?

[Cecil Turner]

That you assume "capping monthly bills" is how a regulated industry actually works demonstrates that you are in need of more education on the subject.

Nice try. Monthly bills is your metric, and happily we have an example: California. Contra your suggestion that Enron was responsible, it was exactly the "capping monthly bills" approach that caused the crisis:

Initially, the freeze on the price that retail customers could be charged for electricity acted as a price floor. The idea was that if wholesale prices fell (which they were expected to do), retail prices would not fall along with them. That would help maintain the utilities' cash flows, although it would also keep consumers from enjoying the benefits of competition at the wholesale level. In the summer of 2000, however, wholesale prices rose above the fixed retail price for a sustained period. When that happened, the freeze acted as a price ceiling: utilities could not pass on their rising costs to consumers. [emphasis added]

[DC]

Not Sylvia. Yeeesh. See ya.

[Jim Ryan]

Is it wrong to think FDR the worst president? He was a good wartime CIC, so I feel badly about it.

[Sue]

Is it wrong to think FDR the worst president?

Yes. I think the worst is the one we now have.

[Cecil Turner]

Not Sylvia.

No kidding. I woulda guessed Creepy Irish Dude, but the comment sample size is small.

[Cecil Turner]

He was a good wartime CIC, so I feel badly about it.

Yeah, I can't support that at all. I'd go George, Abe, and FDR for the top three (wartime CIC in critical moments of history being the primary metric . . . if that's wrong, sue me).

[Neo]

George Soros' money pops up again in the Project Syndicate

[Jim Ryan]

The Sons of Liberty would have hung FDR in effigy for the National Recovery Act.

[The hunt is on.]

You see the face of evil, don't you, Neo.
========================

[Pagar]

Neo, Good find! I had that link all ready to put on the "Every thing Obama" thread because Kim was over there. But over here works as well.

IMO, one of the better titles//"The most slimy essay ever from the Guardian and Columbia University"

[JM Hanes]

The California example is particularly apt, I think. Obama is proposing to treat the insurance industry as a public utility:

The president’s bill would grant the federal health and human services secretary new authority to review, and to block, premium increases by private insurers, potentially superseding state insurance regulators. The bill would create a new Health Insurance Rate Authority, made up of health industry experts that would issue an annual report setting the parameters for reasonable rate increases based on conditions in the market.

[Danube of Thought]

"Gee, what's the median level profit for industry, Cecil?"

My understanding is that it's something less than 3%, but as long as open competition is allowed I don't really care.

A useful exercise for idiots like DC is simply to look about the room as you sit at your computer. Typically, in addition to the computer itself you will see a desk, a chair, pens and pencils, paper clips, perhaps a TV and a radio, a carpet, the clothes you are wearing, a telephone, a few lamps, and etc. etc.

Every single item within your view was produced by someone whose intent was to make a profit from it. Tell us why that's bad.

[Danube of Thought]

" I moved to the Cleveland area in the summer of 74 and honestly don't remember a single gas line."

I remember them vividly in CA in 75 and 76. Carter introduced the odd-even days corresponding to your license plate number.

[Danube of Thought]

"My power company has had price controls for decades."

Not exactly. Your power company, as a natural monopolist, has been subject to rate regulation, in which the rates are determined on the basis of the costs of production and are set so as to allow a reasonable return on investment. This is typically in the area of 8%.

I take it that by "see ya" DC means that he is unwilling to stick around and defend his imbecilities.

[Rob Crawford]

Enron caused the problem in your state, Rob.

I live in Ohio.

And it was price caps combined with regulations preventing the development of new capacity.

[Rob Crawford]

The president’s bill would grant the federal health and human services secretary new authority to review, and to block, premium increases by private insurers, potentially superseding state insurance regulators. The bill would create a new Health Insurance Rate Authority, made up of health industry experts that would issue an annual report setting the parameters for reasonable rate increases based on conditions in the market.

Which means the feds would be superseding the state regulatory structures. Which is one of the specious arguments that has been made against purchasing insurance across state lines.

So why can't we have interstate commerce in health insurance?

(Because it would induce the kind of competition that weakens government meddlers. The primary goal is to increase the power of government, so any idea that does not comply with that goal must be rejected.)

[Rick Ballard]

The average net profit margin for diversified utilities is 7.6% with a return on equity of 13%. Those greedy profit seeking bastards are obviously twice as bad as the nasty profit seeking insurance companies (who probably harvest organs from unwilling donors in their spare time).

[Captain Hate]

DoT is correct on how base rates are calculated. Fuel adjustments are somewhat cost based and in Ohio have annual hearings to oversee.

There has generally been a national glut of electricity supply for quite a while but it's been a while since I've checked that. It doesn't mean that spot shortages can't exist or that the transmission infrastructure is in ideal shape.

[Sue]

corresponding to your license plate number.

I thought it was the inspection sticker, but either way, it was rationing. Gas stations were closed on Sundays around here.

[narciso]

If it was 75-76, that would have been under Energy Czar William Simon, which probably
deserved at least part of the contempt that
Trudeau heaped upon him, but then they doubled
down with Carter

[Danube of Thought]

I think you nailed him, RickB. But somehow I doubt he'll be back.

[Ignatz]

--Every single item within your view was produced by someone whose intent was to make a profit from it. Tell us why that's bad.--

Generally people of DC's mindset would have no problem with price controls on anything and everything.
It is only they themselves who should magically be exempted from charging whatever the market will bear for their products or labors.

[Sue]

OMG. Rush is playing a clip of Obama in 2008, ridiculing McCain for wanting to have a bi-partisan commission to reduce the debt. Obama claimed back then it was the oldest stunt in the book. All you need is a leader. That clip needs to go viral.

[Tom Bowler]

Captain Hate, Danube of Thought, Sue: There were gas lines in Connecticut, but it was probably in '79, not '78. CT instituted that odd-even scheme designating which day you could buy gas based on the last digit of your license plate. Carter had been hanging on to the last vestiges of Nixon's price controls. Most had been repealed but controls remained on domestic oil.

[cathyf]

It is only they themselves who should magically be exempted from charging whatever the market will bear for their products or labors.

Oh, no, Ignatz, they always want more than the market values their product.

[Sue]

I don't remember the exact year. It was after I married in 1976 but before my youngest was born in 1980.

[Fresh Air]

Sue--

That clip is an example of why Zero is a clear one-termer. There is a massive trove of stuff out there on this guy saying one thing and doing another, or criticizing someone else for doing exactly what he is doing. He's not only a lousy leader, he's a truly awful politician.

And another six months of ZeroCare front-and-center is exactly what the Mediacrat caucus needs to get their un re-election campaigns kick-started.

[Jane]

Sue,

If you really want to understand curling, I will explain it to you.

And if not, you are among millions.

[Sue]

Fresh,

I don't know. I can't seem to let go of this nagging feeling that this thing is going to pass. And Obama will be re-elected. ::sigh:: Hopefully, I am just suffering from S.A.D. and can get some judge to say someone owes me tons of money.

[Sue]

http://en.wikipedia.org/wiki/Seasonal_affective_disorder>S.A.D.

A report on F&F this a.m. said a woman sued and won to get her classroom moved. I'm hoping I can cash in on this too. Being in Texas, I'm not used to having snow and snow showers in February.

[Gabriel Sutherland]

OT: You guys might already know this, but the "Chicago Mafia" inserted the July 2011 deadline in Obama's Afghan Policy.

http://www.timesonline.co.uk/tol/news/world/us_and_americas/article7034910.ece

Also, the "Chicago Mafia" is a term coined by the US Military Commanders.

[Fresh Air]

Sue--

I had a "feeling" McCain was going to pull it off, too...

Zero is in absolutely horrible shape politically. He has turned off independents, created a perception of fecklessness and lack of accountability, all the while actually doing nothing whatsoever about the economy.

The average turnout in off-year elections is roughly 37 percent, versus around 55 percent for the general. That spread is roughly the difference between energized and non-energized voters. The Mediacrats are going to lose big in November. If they go ahead and pass this idiocy, it will be a wipeout.

This is not my opinion, it's the belief of Charlie Cook and Michael Barone. If Sabato and Cost weigh in similarly, I think we can definitively say the porcine mezzo is practicing her scales.

[Gabriel Sutherland]

Obama is clinging to an approval rating of 50 in Iowa. IOWA!

He's around 60 in Illinois.

[Danube of Thought]

I heard that clip on Rush's program. I hope there's some way to get it very wide distribution. Best thing I've heard in terms of contrasting the campaign with the presidency.

[Ignatz]

--Oh, no, Ignatz, they always want more than the market values their product.--

My bad cathy.
I forgot markets are always pernicious in that they overvalue everything the DCs of the world consume and undervalue whatever it is they produce; bad art, bad opinions, griping, nothing at all, etc.

[Mustang0302]

OK, Fords and Toyotas only now, n.
======================

kim, have you seen this awful news?

Ford Announces Massive Recall for 2010 Mustang.

Heh.

[Charlie (Colorado)]

Barack Obama, channeling his inner Dick Nixon

May I suggest that the word "Nixon" here was unnecessary?

[Jane]

LOL Charlie.

[Mustang0302]

Barack Obama, channeling his inner Dick Nixon

Inner? He's not doing it right.

[macphisto]

i've been thinking of Obama as the socialist Nixon since way back in the campaign. the paranoia, the enemies lists, the willingness to trash various provisions of the constitution, the manic switches between "reasonable" Obama and "mad as a hatter" Obama...

[johnASC]

It's Hayek's Road to Serfdom, except the road is really really short and you can even see it before you take the first step.

Unfortunately, people are really hurting out there, and whe you're drowing, you'll take anything, even if you know that you will kill the golden goose.

It's really too late to fix he costs part of government, and anyone who dares to imply that the entitlements will bankrupt the country has to be prepared to retire soon.

That's what we really need, some good soul with a conscience left in congress who is willing to retire and never work again in any industry, standing up, saying what needs to be said so americans can understand that entitlements are choking us all.

Give the remaining gutless career politicians cover so that they can deal with the problems honestly instad of worrying about joining the ranks of the unemployed in this climate.

[SunnyDay]

Now they're really going to muck it up. I hate to tell them, but they are not going be able make insurance companies sell policies and lose money while they're doing it.

[DebinNC]

Jennifer Rubin on Obama's hc proposal, plus CBO's press release about not being able to score it...

[It works just fine in Chicago.]

SunnyDay, Obama's people have that all figured out. They're gonna tell the insurance people to make it up on volume.
==============================

[Clarice]

Right after they figure out the profits to earnings ratio,Kim.

[DebinNC]

Video: False Profit

[SunnyDay]

Amazing stuff Deb. I wonder where he thinks money comes from.

[Danube of Thought]

"...they are not going be able make insurance companies sell policies and lose money while they're doing it."

I think that's their intent.

[Danube of Thought]

The beauty part is gonna be having the Senate tied up on this crapola for a few more months while the public is shouting "jobs, jobs, jobs!"

[macphisto]

that's their exact intent. once the insurance companies have been driven into bankruptcy, they'll nationalize them like GovMo.

sometimes i really wish i'd died when i was 40...i can't see any way things aren't going to go from bad to worse, and stay worse for the rest of my days.

[Rick Ballard]

Macphisto,

With only a little luck you will live to see Socialist Fantasyland collapse farther than did the USSR. It won't be fun to watch and certainly won't be fun for people living in the eurozone to endure but reality really does have some advantages over today's unicorn and rainbow idiocy.

IOW - a last gasp isn't quite the same thing as a clarion call of victory.

[Ignatz]

--sometimes i really wish i'd died when i was 40...i can't see any way things aren't going to go from bad to worse, and stay worse for the rest of my days--

Jeepers, dude.
Weeping may endure for a night, but joy cometh in the morning.

[Pagar]

"anyone who dares to imply that the entitlements will bankrupt the country has to be prepared to retire soon."

Some of the ones who already retired may take care of That.

Here's some:
"The top 10 CALpers retirees include Bruce Malkenhorst whose $499,674 annual pension puts him on top of the list. Then there's Joaquin Fuster at $296,555, in second, and Donald Gerth in third with $278,054."

The top name draws a bigger retirement salary than the President of the US draws for actually being President. Google the name for more shocking info.
The Washington Examiner article has a link for checking who is drawing big salaries from CALpers.

[Clarice]

Mcphisto--even if they try the reconciliation route, they have only until April to get it thru that way and the Reps can surely tie it up till then.

It ain't over till it's over.

[Clarice]

Here McPhisto:
It's ain't over till it's over in April

[bgates]

The beauty part is gonna be having the Senate tied up on this crapola for a few more months while the public is shouting "jobs, jobs, jobs!"

Everybody's favorite Boston pinup is on the case:
"I was disappointed with the continuation of politics-as-usual in the drafting of this bill, as it was crafted behind closed doors, without transparency and accountability....I hope my vote today is a strong step toward restoring bipartisanship in Washington."

That's Scott Brown explaining how he supports bipartisanship, which he defines as disappointing, unaccountable politics-as-usual.

[Captain Hate]

Amazing stuff Deb. I wonder where he thinks money comes from.

People making over $250K

[Rick Ballard]

Shoud BOzo's proposal to levy the 2.9% Medicare tax on capital gains be considered a 20% tax increase on the current rate of 15% or a 15% increase on the old 20% rate?

I never knew that the capital gains tax only applied to those making over $250K.

[I Won]

Remember, $250,000 is a quarter of a million dollars. For those of us who struggle to pay off our college loans, fill our gas tanks, and cover piano lessons for our children, that is more money than we can dream of.

[Rick Ballard]

That's true, I Won. How's Uncle Tony doing these days?

[Captain Hate]

I never knew that the capital gains tax only applied to those making over $250K.

I need to file some amended returns

[Old Lurker]

Tell me again about those book royalties, the little wife's phony job,...or the Noble Prize money?

[Old Lurker]

How else could they afford to fly their personal trainer in from Chicago each week?

[MayBee]

Everyone! Please remember that $250,000 for the Obamas is very different than $250,000 for other people. They had some expenses, they had kids, and they had plans.
They struggled making $250,000/year. But nowadays, people making that kind of money can support the whole country.

[Rick Ballard]

"How else could they afford to fly their personal trainer in from Chicago each week?"

Now that's just ridiculous - if he'd lay off the sauce (and the women on those "golf outings" every week) he'd be able to keep the damned ball on his nose even if they sped up the head turns with TOTUS. What's the trainer gonna do - increase the number of herring?