You may never have heard of Joseph Schumpeter, yet he coined the phrase that may best describe the changes in today’s insurance industry. Schumpeter, an Austrian economist, popularized the term “creative destruction.”
In his later years, teaching at Harvard, he wrote a book that agreed with Marx’ premise that Capitalism would eventually yield to Socialism. He differed with Marx, however, in his assessment of the method by which this would occur.
Schumpeter believed that capitalism would not implode due to the normal push and pull of the marketplace, but rather as a result of democratic majorities voting for restrictions on innovation and entrepreneurship; restrictions which would ultimately burden and destroy the capitalist structure.
The fascinating variable in our world is that the collapse has happened to the financing mechanism of the market (insurance companies) before affecting the manufacturing side (doctors, hospitals and other providers) of the equation. It has been said that if you put all of the economists in the world end-to-end, they still wouldn’t reach a conclusion. I’ll bet they would agree on this conclusion: we are witnessing the “creative destruction” of the United States’ medical system.