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File under: Crony capitalism, coercion
Speaking at the Hospital Association of South Africa (Hasa) conference in Cape Town last week, Discovery Health CEO Jonathan Broomberg said the business is seeing a fundamental shift in consumer spending patterns.
Because consumers are more frugal than during the boom years, Broomberg said
“It’s easy for members to buy at lower points in schemes and buy up when they get sick.”
In insurance jargon, this is called “adverse selection.” As a result,
“Schemes are getting much less surplus from the young and healthy to subsidise older, sicker members,” Broomberg said.
In other words, as the internal Discovery redistribution flow from younger/healthier insured people to older/sicker insured people dries up, Discovery is faced with rising costs, falling revenues going forward, i.e. profitability will decline.
Now, instead of finding ways that Discovery could change up its business model to deal with this problem, as a business on the free market must do, Broomberg eyes the state for help.
He said one way to achieve this is
to protect schemes by introducing mandatory cover for the employed.
Got that? Discovery CEO is suggesting that government should pass a law that forces all employed people to take out medical insurance, so that Discovery can increase its internal redistribution from the younger healthy members to the older unhealthy members, to “protect” its business. What about protecting the liberty and freedom of choice of individual consumers to buy or not to buy medical insurance?
This is crony capitalism at its worst. This is not what free market capitalist health care looks like, at all. This is crony capitalism, the merger of state and private enterprise.
Come on Jonathan, compete on the free market like the rest of us, without the help of friends in government who through legislation prop up your business.