WhatFinger


We need the federal government to get the hell out of our way, and let people manage their own affairs

What do telephones and car insurance have to do with health care???  Read on.



What do Lucy Ricardo, Samantha Stevens, Carol Brady, Perry Mason, and your mother all have in common? Telephones.

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They all had that big, clunky, one size fits all, and one color fits all telephone that tethered them to a table. The phone companies were public utilities then. Question. What’s the difference between a public utility, and a monopoly? Answer. One is a board game and one isn’t. But, in differences that matter, they’re often both pretty much the same thing. The main company back then was American Telegraph and Telephone (AT &T), and it had branches under it, all named Bell. Southern Bell, Mountain Bell, Northwestern Bell, and so on. Collectively, they were often referred to as “Ma Bell”. There were other companies, such as United Telephone and Inter-Mountain, but they all had to answer to a Public Service Commission (PSC) in regard to rates. Long distance was very expensive. Sometimes, prohibitively so. Calling long distance was, to paraphrase Joe Biden, a big freaking deal. You had to have a good reason to make that call, and you sweated the clock the whole time. When the bill came, it was always more than you expected. The phone companies had to submit detailed financial reports to the PSC’s in order to establish rates, and to get rate increases. They were allowed to make a profit over their costs, and the PSC’s were charged with keeping that profit in line with what was considered reasonable, as compared to other companies. I’ve heard this process referred to as “cost plus”. The financial reports were prepared by the best and brightest minds that money could hire, but were reviewed by politicians who didn’t understand them, and didn’t have the staff to study them in detail. This gave the phone companies an advantage in justifying their costs. The phone companies had nowhere near the same incentive to control costs as private companies have, and the higher they could legally justify what their costs were, the more money they made. You could get your phone in any color you wanted, as long as it was black. There were two models. The kind that sat on the table and the kind that hung on the wall. Well, that’s not entirely true. There were a few choices, but they were considered to be premium upgrades, and the cost was more. At my house, we had a phone that was (sorry mom) canary green. We also had a princess phone in our “fancy” room. You know, the room where no one is allowed to sit on the furniture. If you had a princess phone, you had arrived. The President had a red phone, but it could only call Russia. Phones were hard wired into the wall, and if you wanted another phone you had to pay big bucks to have someone come out to install one for you. And, you didn’t own it. The phone company did. You paid to lease it. If you wanted a phone not leased by the Bell monopoly, you had to purchase the phone, give it to the phone company, then pay a 'rewiring' charge and a monthly lease fee in order to use it. Ma Bell really had you by the calls. (All together now: groan) Then, something amazing happened. 1984 arrived, and George Orwell was WRONG. The Bell monopoly was broken up, largely due to lawsuits by MCI. Telephone service was now in the free market. I was in a telephone intensive business at that time, (Okay, okay, I was in telemarketing. Don’t hate me please) so these changes had a very large impact on me and my colleagues. There was innovation. Different companies trying to get market share. Salesmen wooing you to get your business. Price wars. Improved customer service.

Wonderful expression of the American free market spirit

It was a wonderful expression of the American free market spirit. MCI had been around for a while, but I hadn’t heard of it until 1984. We started using them as our long distance service. It was kind of unwieldy at first. You had to dial an access number to get into MCI’s system. Then you had to dial an indentifying code. Then you dialed the number. I was paying telemarketers by the hour, so I hated the extra time it took to make a call, but MCI rates were cheap enough to make it worthwhile. Sprint came along with lower prices, and MCI adjusted accordingly, to keep everyone from switching. Someone figured out a way to connect your phones directly to your long distance provider, so that normal “one plus” dialing would put your call through whichever system you were signed on with. There were multi level marketing programs selling long distance service. Sprint had such a program, as I recall, and there was one named Excel. And about a bazillilion others. Remember the ten triple x codes? It was a code you could dial that would route your call to a particular long distance network, bypassing whatever company handled your “one plus” dialing. The code for AT & T was 10288 (10ATT). There were TV commercials enticing you to dial one 10XXX code or another. Most of the time, the enticement was a cheaper rate, but sometime it was a promise to donate a certain amount per call to a church charity. And calls got cheaper and cheaper and cheaper, and innovations came faster and faster. Car phones became more common. Instead of car phone being a high power transceiver, routing all calls through a central radio tower, which could only handle a few calls at a time, they had many smaller towers, and the ability for the phone to switch from one cell tower to another. Car phones were no longer only for the rich. My first car phone was the size of a small suitcase in the trunk, and a handset hard wired into the dash. Then came the bag phones, then handhelds that started off almost too large to hold, and got smaller and smaller. Now, look at the phone industry. Long distance calling doesn’t make a blip in most people’s budgets, and even low income people and children have cell phones. Phones now come is all shapes and sizes, with tons of extra features. Cell phones weigh almost nothing, and have more computing power than you could put in a large building a generation earlier. Iphones were science fiction a few years ago, and now they are passé. Bell Laboratories was one of the most advanced R & D operations in the world. My uncle was a phone company executive, and he told me that he saw development work on cell phones and HD TV back in the seventies, long before the general public ever heard of them. Many of the innovations that I credit to free enterprise may have happened even if the phone company had remained a monopoly, but they wouldn’t have happened as quickly, and I don’t believe that we would have as many choices as we now have. So, how does this all tie in with health care? I’m so glad you asked. Health insurance has been a near monopoly in each state since 1945, when laws were passed that exempted them from having to compete for market share. There are about 300 companies that sell health insurance, but only a few of them in any one state. They have you over a barrel. If they charge too much, you can try to find a cheaper company, but it won’t be much different. The level of service will be of about the same crappy quality. By switching companies, you are only trading the devil you know for the devil you don’t know. They don’t have to innovate, or fight for the market share, or keep their overhead low. Why should they, when they can get your money anyway? For some odd reason, car insurance doesn’t have the same restraints as the health companies do, and you can see the power of the free market working there. When you watch TV, almost every third commercial is car insurance company trying to get your business. They use cavemen, talking potholes, a gecko with a New Zealand accent, and Dennis Haysbert. Some companies sell based only on cheaper prices. Some sell based on the fact that they promise to provide better service. There are companies that target the high risk market, so that people who have had lots of tickets and wrecks can buy coverage. Some Companies offer accident forgiveness. There are choices. If you have a clear title on your car, you can decide whether or not to cover it. If your car gets totaled, and you don’t have it covered, that was your choice. The only public concern is whether you can cover your financial responsibility for damage you do to someone else. Covering yourself is up to you. Maybe you want to have a high deductable, which will make your premiums lower, or maybe you want a low deductable so that you don’t have to come up with an uncomfortable amount of money on short notice. You get to decide that. If your car insurance company makes you mad, you can switch to another, and another, and another. It’s your choice, and the innovation of the car insurance companies makes it possible and affordable. Just imagine what would happen is health insurance companies were forced to compete fairly. Almost overnight you would start seeing commercials from companies trying to capture market share, and premiums would come down. They would have plans tailor made for people of childbearing age, and for people who are past that. They would have plans to suit singles, couples, old and young. Some companies would shun people with preexisting conditions, which would leave room for other companies to jump in and go after that market.

If the phone company was still a public utility, we wouldn’t have quite as many choices, and prices would be higher

They would start to appreciate customers instead of taking them for granted. If they deny a claim without a very clear reason, backed up by the terms of the contract, they will lose you as a customer. They would know you have 300 other companies you could give your money to. If your company wants you to keep giving them your money, they have to make it attractive for you. I contended earlier that if the phone company was still a public utility, we wouldn’t have quite as many choices, and prices would be higher. If the government tried to take over the entire phone industry the same way that they have the health care industry, you would only be able to get a phone designed by Nancy Pelosi, Barney Frank, and Henry Waxman. It would weigh ten pounds, have very few features, and would be very very expensive. If the feds controlled car insurance, many people wouldn’t be able to afford to drive. If the health care industry were allowed to compete, we would see prices fall, and quality of service would rise. Many of the 32 million uninsured would be willing to buy health insurance, if it were only cheaper. Lowering prices with fair competition would put it within the financial means of those people, and the number of uninsured people would go down. Many people could buy insurance, but don’t, because they know that they can file bankruptcy against their bill if they need something major done. So pass a law that makes it more difficult to file against medical bills, and some people would come on board. Limit malpractice lawsuits to actual damage, plus a small, defined amount for pain and suffering , and costs would come down. I’m not naïve enough to believe that free market solutions would take care of all the problems, but it would make a large dent in them. In a society as large as ours, there will always be those people who cannot provide for themselves. I have no problem seeing my tax dollars go to help those people. We don’t need a big federal government program to manage our health care. We need the federal government to get the hell out of our way, and let people manage their own affairs. That’s the way I see it.


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Neill Arnhart -- Bio and Archives

Neill Arnhart lives in Southern Indiana with his wife, step daughter, two dachshunds named Ricky and Lucy, an Australian Cattle dog named Indiana (Indy for short) an inside cat named Elphaba, and about a dozen barn cats.  Aside from living in the US, he has lived on the island of Trinidad, and in Venezuela, back when it was nice place.

When not rousing the rabble with sarcastic essay’s, he hides behind the secret identity of a mild mannered insurance agent, specializing in Medicare, and other matters concerning senior citizens.


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