The vast majority of high–end cellphone users are blissfully unaware the $200 they pay to upgrade their phone is a heavily subsidized price. Most of us think the $200 is bad enough, but if customers were paying full retail for their newer phone the price would be in excess of $650 for a model from Apple.
That’s a lot of money to pay in one big chunk for a device your teenager is likely to drop in the toilet.
Cell service providers cushion the blow by folding the rest of the cost into the contract. That’s why early cancelation fees are high. The company is recovering the cost of the phone.
This system worked fine as long as competition in other areas of the business was at a manageable level, but that’s changed. AT&T, Verizon, Sprint, T–Mobile and other providers are cutting prices and beefing up bundles on minutes, data and contract length. Consequently, financing phone purchases is less attractive.
This is where competition works to your advantage. Apple knows if customers have to pay the entire cost upfront, sales decline as customers wait longer between upgrades.
So Apple will now finance iPhone purchases for $32 per month AND allow customers yearly upgrades. In addition, Apple includes its premier AppleCare service ($99/yr.) as part of the package.
Finally, Apple will give customers the option of switching cell carriers every year, marking the end of the two–year contract and repaying cell provider’s decision to stop financing phones.
Customers benefit from more choice, more competition and lower prices.
Compare a competitive marketplace with a market controlled by Uncle Sam or in this case Uncle Same.
Where Apple, a manufacturer, competes head–to–head with cell providers to the customer’s benefit. Under Obamacare the feds decide what every insurance company will cover in every policy.
While Verizon may offer more data than AT&T, faster connection speed or a smoking saleswoman in commercials — Blue Cross will cover exactly the same conditions in exactly the same manner as Anthem. My insurance premiums pay for a young mother’s sonograms and she pays for my lumbago treatment.
Companies can’t offer lower premiums in exchange for a larger deductible, lower deductibles in exchange for higher premiums or a combination of lower premiums and more limited coverage, because Washington experts know you can’t make your own decisions.
Instead Americans are offered their choice of color: gold, silver, or bronze health insurance plans. Your only method of lowering the cost is to move down the precious metals curve.
Obamacare insurance companies don’t compete. Large insurance conglomerates deal with large hospital conglomerates — a sure sign of a market with either government interference or regulatory capture — and both send legions of lobbyists to Washington to bend the rules in the company’s favor.
The patient only becomes important when he makes a co–pay or sends in the premium.
Top–down control, regulations and lack of competition result in price increases as sick people who have heavily subsidized insurance use their “free” healthcare, hospitals benefiting from opaque pricing (for complete details on this outrage click here
) raise their prices and the insurance companies hand the bill to the consumer.
Or some of the consumers: A stunning 85 percent of the people “buying” coverage through state and federal exchanges receive subsidies that lower their price but not the taxpayer’s.
Here’s a rundown of just a few requested rate increases as reported by The New York Times: Utah 45 percent; New Mexico 51 percent; Minnesota 54 percent; North Carolina 25 percent and Oklahoma 31 percent.
With the same insouciance he used to predict the lowering of the tides Obama pontificated in the Times that if Obamacare commissars “do their job and actively review rates, he said, “my expectation is that they’ll come in significantly lower than what’s being requested.” He believes that because in Obama’s world if you squeeze a balloon it doesn’t change shape.
In the real world companies will ration care by dropping doctors from the network who won’t accept lower reimbursement rates and replace them with less expensive doctors or nurse practitioners.
It’s entirely possible the graduate of the University of Namibia medical school that handles your rash will be entirely adequate, but what about something more complicated?
That’s why conservatives looking for a presidential candidate should be wary of those promising to “repeal and replace” Obamacare. “Replace” just means a temporary smaller federal footprint in the market that will be expanded exponentially the next time a Democrat takes office.
“Repeal” is the only option with a chance of success for conservative voters.
Markets run on the cellphone model are successful and beneficial. Markets run on the Obamacare model aren’t markets at all.
Michael R. Shannon is a commentator, researcher (for the League of American Voters), and an award-winning political and advertising consultant with nationwide and international experience. He is author of "Conservative Christian’s Guidebook for Living in Secular Times (Now with added humor!)." Read more of Michael Shannon's reports — Go Here Now.
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