By looking at the House health care reform bill, it is very clear this bill is going to thin off the herd of private health care companies.  Obama wants to "balance" the playing field for health care insurance by writing the rules and throwing the government's hat into the ring.  I happen to think that private insurance is the solution to raising health care cost but not with the mandates the government will enforce. 

At first glance it seems that private insurance has a strong part in the House bill.  That is until you start turning the pages and seeing the mandates placed upon private insurance.  The biggest issues for me happen to be around the fact no one can be turned away from buying insurance because of a preexisting condition and that no one's premiums can be raised because they use more of the system than an average person.

If you believe in capitalism and a free market society then those two issues should be deal breakers for you.  If I'm over weight, smoke and work 1,000 ft in the air, I'm going to pay more for life insurance than some one that's fit, doesn't smoke and works in an office building.  The basic reason we don't all pay the same rates for life insurance is risk.  Life insurance cost more for at risk individuals than low risk individuals.  This is basic economic theory that anyone can understand.

Another basic economic theory is Risk vs Reward.  By managing risk you can maximize reward.  If you remove all the risk, you also remove all the reward.  Placing your extra saving is a safe deposit box is an absolute no risk solution that offers no reward.  Placing your extra savings in the stock market offers rewards if you are willing to place risks.

By leveling the playing field in the health care insurance market the government will essentially create a no risk environment.  Every company will be forced to match the government's policy and premiums.  There will be no benefit to managing risks because you can't deny a claim or a client because of a preexisting condition. 

What will happen is small insurance companies will eventually fail because they can't balance their risk.  Why large health care companies succeed is because they realize that 80% of people will barely ever touch their health care plans.  That 80% will end up covering most of the cost the other 20% of people run up on their health care plan.  When you cover tens of millions of patients you will turn a profit. 

One health care company made 40 billion in revenue but only turned 4 billion in profit one fiscal year.  That profit looks nice but what should be shocking is that the company had to spend 36 billion to earn that 4 billion. That's a 11% rate of return on the company's initial investment.  Considering the vast number of patients they covered it's alarming they didn't have a better rate of return.

The current health care system offers very little choice to individuals.  Most people are stuck with the insurance that their employer offers them.  About nine in ten Americans are enrolled in employment based health care plans.  These plans are very run of the mill offering either high deductible or low deductible options.  Since they are designed to fit large groups of people they often include options most people will never use. 

The real solution to health care reform is to open the market to consumers.  Remove health care as a mandatory benefit for full time employees and allow people to choose the best plan for their family.  Allow insurance companies to offer a variety of plans and actually compete for their patients instead of negotiating a slick deal with some corporate vp. Make health insurance just like any of the other types of insurance you can buy.  You can keep the government plans already on the books for the illegals and indigent that are in need of a hand out.

Unfortunately we have a president that will never embrace free market principals and a liberal media that will never voice opposing views.   The media is too interested in ignoring the opposing voices and then bashing the opposition a having no alternative solution.  One just has to spend a few minutes listening to conservative talk radio or searching the blogosphere to find alternative options to Obama's "progressive" health care plan.