Government Intervenes in Healthcare Market
http://registerguard.com/rg/business/34871092-63/health-plan-matching-set-up.html.csp
Recently, due to new laws, insurers are bailing out of the Health law’s market and the Obama administration fears that this will cause their customers to also leave the market. Financial losses are causing Insurers to leave the market and younger people are staying out of the market, even knowing they could be fined for not being insured. Markets like HealthCare.gov subsidized private coverage for people who do not have a job-based healthcare plan. The idea, originally, was that perfect competition would lead to affordable coverage. This idea has worked in metro areas, but has not been as successful in rural areas. The Obama administration is now stepping in by making recommendation to people whose insurer has left the market. Society, though, is worried about this intervention; it is feared that customers will be unhappy with the reduced options or that they will view the government’s recommendations as the only options. Administration officials are attempting to be clear that the government is not signing people up for these plans, only making recommendations, but people are still scared of the implications of these recommendations. Some people do believe that this is reasonable since the lose of more customers will only further hurt the markets and society.
Healthcare has long been an example of a matching market problem; the sellers are the insurers and the buyers are the individuals looking for insurance. Individuals, who do not get insurance through their job, must find plans that will insure them and that are a good fit for their lives. A plan that will cover them could be too expensive or not be accepted by many doctors in their area. However, with many insurers leaving the market and buyers becoming skeptical, the Obama administration feels the need to step in as an intermediary. Unlike in class, the government is not stepping in to make a profit, but to help society. For example, insurance plans’ prices could go up for those who remain when people and/or insurers leave the market. In this article, the government’s role as an intermediary is more like Google than the Stock Market. It is disseminating information to help match sellers to buyers and keep the market running effectively. This intervention could potentially help society, but also has the potential to have to opposite effect. As pointed to in the article, if people are unsatisfied with the plans provided and think that these are their own options than they may choose not to be part of the market. If this happens, then the opposite of the Obama’s administration intention will happen and the market would be hurt. Although there this possibility, the administration feels the need to try to aid the market and hope that their intervention has positive effects on the market.