[4Liberty]

1. Interest groups (industries) want government (taxpayers) to bear the costs of contract enforcement. It relieves them of those costs, and these regulations represent a form of subsidy.

2. The problem is, once the govt passes blanket regulations like this, the consumers have NO CHOICE among competing companies, some requiring different prices, and some pooling risk rather than discriminating, some giving price discounts for “good” behavior, rather than price increases for “bad” (costly) behavior (same thing, but - consumers can stomach the former, for some reason...). Industries don’t care about government intervention and the loss of customer choice, however; they only care about the bottom line. Most businesspeople are not free-marketeers, but are amoral profit maximizers — “by any means necessary,” unfortunately...

3. To be fair to the insurance industries that lobby the govt for these benefits, it is also true that the industries THEMSELVES are prevented from “discriminating,” initially. So these regulations may represent a second-best outcome, to them.

Ideally, government would get out of the business of both “preventing discrimination” (read: pricing risk), and out of the business of pandering to interest groups desiring govt. to bear liabilities, rather than having markets bear the risks. The Moral Hazard problem (and costs to taxpayers) is the end result of the latter activity. Let companies discriminate if they want — but also let competition among companies give consumers choices, while having businesses bear their own risks & costs.

Does this help?

Regards,

4Liberty

[timm22]

Let companies discriminate if they want — but also let competition among companies give consumers choices, while having businesses bear their own risks & costs.

I think we are in agreement on everything you wrote. I have no problem with price discrimination in the private sector. I don't even have a problem with the *concept* of government price discrimination, at least in most instances. In theory, it leads to more efficient allocation of resources and potentially fewer tax dollars spent.

But in practice, government price discrimination is not just about increased economic efficiency, as it is in the private sector. Governments (and those who influence them) are concerned with more than just our money. That's why we should be alarmed by government price discrimination even if we find it acceptable in the private sector. It can very well be a sign of more intrusive policies down the road.