Why free market principles fail in the health care arena.

[dhpgetsit]

Why free market principles fail in the health care arena.

Joe Six-pack Is a healthy 25 year old starting his own business in landscaping. He has no dependants and sees no need to buy health insurance. He has just finished a very nice patio and gotten paid, so he grabs his camping and fishing gear and heads out of town. While rounding a bend in the highway, he runs over some debris in the road, has a blow-out, skids off the pavement, rolls his truck and slams into a tree. Someone calls 911 and an ambulance is dispatched. Joe Six-pack is rescued and taken to the emergency room. He is stabilized but his leg is badly broken and he has to remain in traction for 2 weeks.

Who pays for his medical bills? Because Joe Six-pack is unable to pay his bills, the hospital is forced to raise its rates. This means the insurance companies have to pay Joe Six-pack's medical bills. The insurance companies in turn have to raise their premiums in response.

Sally Six-pack is trying to work her way through college. She has health insurance through her employment, but she needs to pay half of the premiums. And thanks to Joe Six-pack, the premiums have gone up. She figures she will get a better job when she gets her degree so rather than pay the additional premiums, she drops the health care.

Thanks to Sally Six-pack the insurance company has lost some revenue. Realizing that raising premiums will probably cost them some more customers, they look for another way to preserve profits. They look for areas where they are losing money and they find Freddy Fifth. Freddy has recently been diagnosed with cancer and his radiation treatments and drugs are costing the insurance company a fortune. But Freddy failed to disclose the fact that he was treated with a prescription drug for acne as a teenager. So Freddy's insurance policy is canceled! High fives all around the insurance company board room!

Freddy quickly burns through his life savings and still needs more treatment, so who ends up paying for it?