Global Market Reviews

The US is justly proud of its reputation as the home of modern capitalism and has promoted the idea of free markets to skeptical countries around the world. The fact that a bubble in the property market fuelled this recession does not change the philosophical power of the US economic model. When it works properly, the free market pushes businesses to compete. This improves the quality of service and keeps down the price. The consumer benefits. All federal government need do is intervene when there is clear evidence of a company abusing its dominant position to damage the consumers’ interests. Unfortunately, under the last administration, antitrust enforcement was scaled back. Worse, there were deeply entrenched monopolies and cartels that could not be investigated or regulated. The leading example of this immunity is enjoyed by the insurance industry. Some sixty-five years ago, it was exempted from federal antitrust laws by the McCarran-Ferguson Act. This is a sad example of corruption in government. Vested interests bought enough votes to get the Act passed. Lobbyists’ money has kept the immunity in place ever since.

Why is this immunity as bad thing? Competition improves choice. Given a reasonable number of companies competing in the same market, each must offer features to distinguish their product from the others. Once consumers see one product is better, they will transfer their business. The competitors must therefore match or improve on those features to win back market share. If there’s no effective competition, an artificially small number of products will be offered. The companies will agree not to compete on quality and price which rigs the market and divides it up between the suppliers. In the insurance market, patients have been paying artificially high prices. Doctors have also been paying inflated prices for their medical malpractice insurance. At a time when the costs of healthcare and drugs have been rising faster than inflation, this is penalizing the US consumer and the taxpayer who often ends up subsidising payment of these inflated prices. There is no justification for retaining this immunity. Read the rest of this entry »

Washington likes acronyms when it comes to lawmaking and this new law is no exception. This is the Genetic Information Nondiscrimination Act (GINA) and this November sees it finally come into force. Because it affects both employers and the insurance industry, this has been a hard-fought change and was only signed into law last year. Now it should prevent you from obvious discrimination. Sadly, it does not rule out discrimination by backdoor means. If an employer overhears you talking at the water cooler or routinely surveys local news including the obituaries, it is legal to use this information. But, overall, you should find some improvement. It covers two different situations with the same type of result. Firstly, it prohibits employers from asking you to go through a genetic test or making genetic information the basis of deciding whether to hire, promote or fire you. Secondly, it prohibits insurers from testing or demanding genetic information about you or your family in deciding whether to offer you coverage, in setting the premium rate and level of the deductible, or continue the cover.

Let’s be completely clear. The law does not care who is asking for the information If it is going to be used for either purpose, the asking is unlawful. If this happens to you in an interview, it may pose a dilemma. If you cite the law and refuse to answer, the interviewer may think you a troublemaker with something to hide and not hire you. That you can complain to the local Department of Labor and take satisfaction in seeing a civil penalty imposed, this does not replace the offer of employment in these difficult economic times. The temptation to answer will be strong. But when it comes to insurance companies, you must stand up and assert your rights. If the insurer persists, report to your state’s Department of Insurance. This will put the insurers at risk of losing their license to sell policies in your state. This is a big stick to wave in defense of your rights. More importantly, the Department can order the insurers to offer you insurance on regular terms which protects you. Once employed, it’s just as important to stay alert. The operators of group health plans are known to offer incentives like lower premiums to employees who answer a questionnaire including questions about their family medical history. Obviously, insurers want to know if there is a risk of serious diseases like cancer. You might be more at risk if there is a history of cancer in your family. Everyone should refuse to answer. Read the rest of this entry »

Insurance is a program that lets you pay instalments now against the risk of expenses in the future. With something like fire insurance, you get a quote for rebuilding your home or business premises from the ground up. That represents the maximum amount necessary to put you back into the position before the fire struck. No matter how optimistic or pessimistic you are, you and the insurance company can put a price on the potential loss. Unfortunately that does not work so well when it comes to medical costs. The young and optimistic have perfect health and prefer not to think about the risk of accidents or illness. These are things that happen to other people. But, sooner or later, there is greater realism. As the years roll by, most recognize the probability of illness is increasing and put some level of protection in place. But the basic question of optimism and pessimism never goes away. Do we assume the injury or disease will come and go quickly? Will there only be a few tests, no major interventions and no continuing costs? Or will the problem prove more serious, require major surgery and long-term care? Until the recession hit, we could all afford to be reasonably laid back. Those more inclined to provide against the darker possibilities would add a few dollars a month to the premium instalments and sleep well at night. But with every family budget coming under pressure as the economy tanks and unemployment stalks the land, the question becomes more difficult to resolve. Those few extra dollars a month have to be justified.

Why think about it now? Well, let’s take the worst case scenario. Suppose you or one of your family are struck down. Suddenly, you are looking at big bills and worried about the extent of the cover available under the policy. This is not the best time to open negotiations with the insurer. You are emotionally weak. Worse, the reality of large losses will color the reaction of your insurer. The best time for these negotiations is when you are calm and all the losses for the insurer are in the future. This allows everyone to deal with hypotheticals and not get alarmed when big numbers are mentioned. So why do insurers start talking about big numbers? The national statistics show claims for long-term care almost always fall into the range of three to five years. That’s a big bill when you add in all the different services potentially required, whether in your own home or a nursing facility. Read the rest of this entry »