A bit naive
Reader comment on: Getting Around a Price Cap
Submitted by ben (United States), Dec 26, 2010 16:46
The company that will benefit in such a muddled and confusing market will not be the company that can explain things clearly, but the company that can bury the painful details in the fine print. As you note, this insurer write unintelligible explanation for the average person. If there were a comparative advantage to explaining things clearly, why wouldn't they have already taken it? No, the advantage is confusion, which is exactly why we need government regulation to help insure that people don't get as ripped off as they would be otherwise.
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The Future of Capitalism replies:
Well, this is already a highly regulated industry (and the government isn't exactly known for clear writing skills, as the IRS tax instructions demonstrate.) It's impossible to bury the painful details in the medium to long term, because the customer will get a bill for what he owes for the colonoscopy. As for "why wouldn't they have already taken it," it reminds me of the joke about the efficient market hypothesists who pass a $10 bill on the sidewalk and don't pick it up because if it were a real $10 someone would have already picked it up. There are all kinds of market opportunities out there that haven't been seized yet for all kinds of reasons. In the case of insurance, the extensive regulation makes for a high entry barrier.
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