Newtown, CT – January 22, 2016
When it comes to price transparency, too many politicians embrace crony capitalism instead of market economics. They need to stop – Imagine a securities market in which the actual price negotiated between the buyer and the seller is kept hidden, but the mutual fund has to disclose the price of its fund (which is supposed to reflect the price of the underlying securities) to its shareholders. Who’s to say that the price of the fund actually reflects the price of the underlying securities? In an opaque market, anyone can do anything, and the fund holder is left holding the bag. Not one of the millions of Americans who are invested in mutual funds would accept such a state of affairs, and not a single House or Senate representative, whether federal or state, would allow mutual fund managers this type of discretion. And yet that’s exactly what state legislators are accepting across the country when it comes to healthcare transparency. Instead of allowing the real underlying price to be revealed to all, they accept that health plans or hospitals can disclose that information, in a manner that suits them, without any ability for the insured – the premium payer – to verify or validate the information. It would never be acceptable for retirement plans, and sure as heck shouldn’t be acceptable for health benefits plans.
What this means to you – State legislatures are kicking off their annual session and will review and vote on various bills. In many states, bills will be introduced to push through pricing transparency, and the forces of crony capitalism will again assert themselves against the forces that believe in market economics. Because let’s be clear, there cannot be a market if there isn’t price and quality transparency, and anyone who argues the contrary should go back to college and take economics 101. States like Florida will take up debate on a couple of transparency bills, neither one of which goes as far as Governor Scott and the people of Florida would like to. I’ve been critical of Governor Scott in the past, but he has shown true leadership in trying to push through the right legislation to shed light on health care prices in his State. The lobbyists have, however, done their job, convincing enough cash-needy politicians that price transparency can be doled out by health plans or hospitals. Who needs another government bureaucracy when the free market can take care of it? So goes the argument of the fake market economists, the crony capitalists who don’t really believe in the free market, but certainly believe in campaign contributions. By that argument, let’s get rid of the Securities and Exchange Commission, and let companies self-declare the price of their stocks and bonds. It’s so ludicrous that every true believer in the free market should decry it, and yet, too often, they don’t. Earlier this year we said we would not stop calling out stupid policies, to the point of being unbearable, because ultimately the burden we place on those who implement the stupid policies is nothing compared to the burden on the Americans who have to live with those policies. And so here it is, the stupid policy of fake transparency, the one that accepts that self-serving intermediaries are better suited to disclose the truth than an independent regulatory agency. We all know better, so let’s stop pretending, call it out, and work hard to make sure that better policies are enacted. Kudos to Governor Scott, and here’s hoping that many will follow his lead.
Francois de Brantes