San Juan Mountains

San Juan Mountains
San Juan Mountains: Grenadier Range

Thursday, October 22, 2015

Shocking News: A Non-Profit Goes Bankrupt!

The oxymoronic concept of a non-profit corporation has always mystified me.  Perhaps that is because I understand too much about economics for my own good.  If only I were more ignorant of economics I could join in with the happy throngs as they celebrate the concept and existence of not-for-profit corporations that allegedly serve the needs of all consumers without that evil and greedy profit motive ruining everything.  It seems to be a truism that profit seeking corporations have only their own interests at heart whereas not for profit corporations only care about those they are serving.  Let's consider that nonsense, and a real world example of it, for a while today.
A profit is the best evidence for a corporation that the needs of the consumer it is trying to reach are being met.  In the absence of coercion, a state of affairs most people are completely unfamiliar with in today's Socialist Democracy of Amerika, a consumer will only pay for something that he values more than the money he holds in his hand.  On the other side of the transaction, the producer will only sell something when he can sell his good for more than it cost him to produce it.  In other words, he values the money the consumer is willing to give him more than he values the good he has produced.  In a free market transaction both parties to the transaction are satisfied because each goes away form the transaction with what he was seeking.  In a free market transaction both parties are winners since the buyer has a good worth more than the money he held and the seller has money worth more to him than the good he produced.
Now it should be obvious to everyone, but it rarely is, that a producer of goods cannot long continue to produce goods if the process of doing so causes him to incur financial loses.  When a producer is forced to sell his goods for less than it costs him to produce them it is only a matter of time before he runs out of money.  When he runs out of money it will be impossible for him to produce anything and the good that he had been producing will disappear from the market.  In order to keep any particular good from disappearing from the market it is imperative that some company be capable of producing that good and selling it for a profit.
All that I have written thus far is simple common sense.  It is too bad common sense is so uncommon these days.  Socialists, by definition, hate the free market and voluntary exchanges between free people.  Socialists, by definition, hate profits and the greedy industrialists who garner them.  Socialists, by definition, love, adore and worship the government because the government is routinely involved in the process of forcing buyers and sellers to deal with each other outside of the economic universe of profits and loses.  Socialists love big government because big government creates monopolies that grant monopoly profits to other socialists, thus driving all of those who believe in freedom out of the marketplace.  In a word, socialists hate everyone but themselves whereas profit seeking businessmen seek to serve as many people as possible via voluntary exchanges.
It should be obvious that the idea of a non-profit corporation is nonsense.  How can a corporation ever determine if it is serving the public if it does not have the profit mechanism to give it the feedback necessary to respond to consumer demands?  By deliberately seeking to not earn a profit a business commits corporate suicide.  The decision to eschew profits essentially guarantees that the company will lose touch with its desired consumers and, given enough time, end up going bankrupt.  And that brings me to the topic of Colorado HealthOP.
According to the Denver Post, "Colorado HealthOP will shut down, leaving 83,000 members scrambling for insurance coverage and taxpayers on the hook for about $72 million in federal loans used to start and support the co-op....HealthOP is the seventh co-op in the nation to collapse.  Similar nonprofit insurers have failed in Kentucky, Louisiana, Iowa, Nebraska, Nevada, New York and Tennessee...."  I am shocked!  Imagine this situation....companies that set out to not realize profits are going bankrupt!  Who could have predicted this scenario?  Who could have guessed that 83,000 consumers would be left holding the dirty end of the stick when their health insurance co-op collapsed?  What do you think, will those 83,000 disgruntled consumers of health insurance policies demand that the free market be permitted to serve them?  Ha! Ha! Ha!  We all know the answer to that.  Those envy-filled socialists will clamor for another taxpayer financed government program to give them subsidized rates on their policies.  There is no way they will be willing to pay for their own health insurance when they can force the "rich," whoever they are, to pay it for them.
How did this bankruptcy come about?  The story continues, "Colorado HealthOP's financial health was rocked this month when the federal government said it would not make the full 'risk corridors' reimbursements promised by Obamacare to help insurers take on the sickest, most expensive members.  The risk corridors program is intended to limit how much money an insurer can lose or gain on policies sold through state health insurance exchanges.  The government will reimburse some losses but also expects plans that make money to pay into the program.  In 2014, insurers paid about $362 million into the program but asked for $2.87 billion to cover losses."   So let me get this straight.  One of the many giveaways in Obamacare was one that allowed nonprofit health insurance co-ops to be reimbursed with federal taxpayer dollars for the losses they suffer when they issue policies to people who are really sick.  The various co-ops around the country, desperately seeking to never make a profit, jumped at the chance for federal taxpayer financed subsidies (paid for by the top 49% of the income population by the way) and within one year they were a staggering two and a half billion dollars in the red.  Now Obamacare, to the surprise of no one, has declined to pay those subsidies and the co-ops are going belly up.  Who could have seen that one coming?  Quick!  Call for a federal investigation of this disaster!  Certainly there is some profit-seeking insurance company operating somewhere that can be blamed for what has happened.

No comments:

Post a Comment