Greenspan Admits "Mistake" in Regulation-Free Market
Last week, former Fed Chairman Alan Greenspan admitted flaws in his free-market ideology. Flaws that are now eroding our health care system.
Greenspan told a Congressional committee, "I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms."
The ideology that Greenspan discarded Thursday is that organizations—whether Lehman Brothers, Blue Cross, or the Red Cross—will ensure their long-term survival by adopting self-interested strategies. The problem is that the self-interested pursuits of Wall Street over the last several years were not about the long-term survival of the various institutions now imploding daily or their shareholders, but the short-term self-interest for profit no matter what the cost. So great was the thirst for profit that certain captains of Wall Street, some knowingly, drove their companies into the ground to eke out the last pennies.
Health insurers are wrecking health care in the same way. Dramatic consolidation in the health insurance industry, aided by inadequate oversight, has resulted in four companies—WellPoint Inc., UnitedHealth Group, Aetna Inc. and Cigna Corp.—providing coverage to about half of Americans with insurance. More control over the market has allowed insurers to jack up costs while cutting back on care. Premiums have skyrocketed, increasing over 87 percent over the past six years. Meanwhile a record number of the health care system's shareholders—the American people—are uninsured. Yet costs continue to increase, and coverage gets skimpier.
How long until the health care system hits rock bottom? Will the health insurance CEOs skate away with going out of business bonuses while they too ask for bailouts?
The banking crisis has put the writing on the wall for the regulation-free approach to corporate oversight. Let's hope Congress gets the message in time to resuscitate our health care before it goes under too.
Greenspan told a Congressional committee, "I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms."
The ideology that Greenspan discarded Thursday is that organizations—whether Lehman Brothers, Blue Cross, or the Red Cross—will ensure their long-term survival by adopting self-interested strategies. The problem is that the self-interested pursuits of Wall Street over the last several years were not about the long-term survival of the various institutions now imploding daily or their shareholders, but the short-term self-interest for profit no matter what the cost. So great was the thirst for profit that certain captains of Wall Street, some knowingly, drove their companies into the ground to eke out the last pennies.
Health insurers are wrecking health care in the same way. Dramatic consolidation in the health insurance industry, aided by inadequate oversight, has resulted in four companies—WellPoint Inc., UnitedHealth Group, Aetna Inc. and Cigna Corp.—providing coverage to about half of Americans with insurance. More control over the market has allowed insurers to jack up costs while cutting back on care. Premiums have skyrocketed, increasing over 87 percent over the past six years. Meanwhile a record number of the health care system's shareholders—the American people—are uninsured. Yet costs continue to increase, and coverage gets skimpier.
How long until the health care system hits rock bottom? Will the health insurance CEOs skate away with going out of business bonuses while they too ask for bailouts?
The banking crisis has put the writing on the wall for the regulation-free approach to corporate oversight. Let's hope Congress gets the message in time to resuscitate our health care before it goes under too.