September 30, 2009

American "Enterprise" Institute?

Up is down. Enterprise is...stasis?

I've seen a couple of quotes on the order of the one at the end of this article. They remind me of the "nobody saw this coming" quotes about the mortgage/housing bubble (e.g.--of course several people, including the author and economist Bob Shiller, already well known for calling the stock market bubble previously, saw the housing bubble and sounded the alarm). So here is another iteration of "nobody knows."
“Nobody has ideas that are going to fly off the page and go into effect very quickly that are really going to reduce total health spending as opposed to shifting it around so the federal cost is lower,” said Joe Antos of the conservative American Enterprise Institute.
I suggest, at least in this instance, we are hearing an opinion that should not be associated with the word "enterprise."

To get widespread innovation and change, with results within just a few years, create a real marketplace. In a real marketplace, buyers are able to realistically compare products and their prices. Buyers are able to actually compare apples to other apples.

Consider what this proposal by Senator Wyden would do for creating a real market in health insurance. When offering a better form or value of health insurance becomes visible to more of the people looking for health insurance, then innovation pays off more quickly since more customers arrive at the front door. What could fit into the current Senate Finance bill? How about this proposal, being considered now.

What happens when people get more transparency, so that they can see the prices they are paying? It would be a change, compared to a market in which actual prices have been hidden by having employers pay premiums without their employees knowing the full cost of those premiums, which replace a part of their take-home pay and replace much of their would-be pay raises.

In a market where individuals can actually see prices, they begin to compare more, and shop around. When certain sets of benefits become standard -- "bronze," "silver," etc. -- it becomes possible to compare policies like apples to apples. People begin to know what they are buying, and what it costs. That's called a market. Dynamic (active) markets create innovation. That's part of how enterprise pays off for everyone.

Update: I've got some good company in my view, of course.

10/2 update: Wyden's proposal in the Senate Finance Committee is ruled out of order by the chair. But I doubt we have heard the last of this idea of opening the exchanges to more people.

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