On one side of Battlefield Parkway, a gallon of regular unleaded was listed at $2.45. The pumps were deserted. Across the street, the price was $2.44. The joint was packed.
Yet Washington remains certain that consumers are incapable of selecting lower-cost goods and services - even when the cost is measured not in pennies but in thousands of dollars. As evidence, the administration is readying tar and feathers for a California insurer that plans to raise premiums on most individual policyholders by 24 percent. The default assumption is that the company is gouging and consumers have no choice.
The White House cannot conceive that rising demand for complex, costly medical services - and the dropping of policies by healthy folks in the recession, leaving a pool of policyholders who need more care - has anything to do with why Anthem Blue Cross is raising rates. From the administration's perspective, it's all about yachts and Rolexes and the usual purported objects of corporate fat-cattery. The company must be raising premiums just because it can.
There is a technical term for that business model: suicide. If companies can increase prices with impunity, why wouldn't they double prices every week and really rake in the caviar? Because nobody would buy their products, of course. People who won't pay an unnecessary penny for gas sure as squash casserole won't pay thousands of dollars more for one insurance plan when a cheaper alternative offering the same benefits is available. There's a technical term for that, too: competition.
The trouble with saying Anthem is raising rates "too much" is that it is not the only insurer in California (though it is one of the most popular, judging from the vast number of Californians who buy its policies). If money-lust, unconnected to actual costs, is driving its rate hikes, then any number of presumably cheaper insurers will pick off its policyholders in bunches. Unless, that is, those customers went with Anthem because it provided better service or lower costs in the first place.
But what about customers who can't readily buy individual policies elsewhere because they have preexisting conditions? Isn't it mean to raise their rates?
Well, define "mean." Is it mean for Anthem to charge enough to meet the expense of covering those with serious medical conditions, or is it mean for other companies not to cover those patients at all? Are the sick better off with expensive coverage or no coverage? The Anthem unit in question lost money last year. Wonder how eager it will be to keep offering broad-based coverage if it can't raise rates enough to cover costs and it continues to be an administration whipping boy.
Benefits have costs. And better benefits have higher costs. Having government a) set insurance terms and prices or b) take over the whole shebang doesn't get rid of costs. It only adds a dictatorial new layer of expense in the form of government bureaucracy.
Anthem should take a page from Whole Foods co-founder John Mackey. Last year, he delivered the uppercut heard 'round the Beltway by telling the administration to get its hands off health care and support free-market innovations and malpractice reforms that would cut costs.
Imagine that: Corporate America - those evil folks who provide lots of us paychecks and cover a chunk of our medical costs - challenged the president. And did not spontaneously combust!
Sure, the media rushed to condemn Mr. Mackey. (Who is he, after all, to question the economic theorists in the White House when his only accomplishment is running a successful, bailout-free company?) And yes, there was talk of boycotting Whole Foods to teach it a lesson.
But the bluster went exactly nowhere. Whole Foods' sales soared after Mr. Mackey's declaration of independence. Not everybody thinks talking back to the president merits punishment, it seems.
Which brings us back to Anthem. Health and Human Services Secretary Kathleen Sebelius has sent a "sternly worded letter" to the company, demanding that it publicly justify its rate hike.
Anthem should go public, all right. As in:
"Please show us what federal law we've broken. Barring that, please tuck your dream of a command economy under one arm and go dazzle somebody who cares.
"Sincerely, the good folks at Anthem, who, unlike the stimulus and Congress, know how to create jobs and balance budgets."
To reach Steve Barrett, call 423-757-6329 or e-mail firstname.lastname@example.org.