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This is effectively how taxes on goods work. Governments make certain goods or services (or more intangibles such as income) cost more (taxes) which they then u
by dwohnitmok 6y ago
This is effectively how taxes on goods work. Governments make certain goods or services (or more intangibles such as income) cost more (taxes) which they then use to provide discounts on other goods or services (e.g. library services, postal services, reducing or eliminating healthcare costs, etc.).
The main difference from taxes is that this is private enterprise vs a purely government endeavor, but in that respect it's really not very different from other government regulations on private enterprise as well as contracts between purely private entities (there are plenty of proposed and actual regulations and contracts on bundling goods and services, which is effectively what this is, just with more flexibility than with usual bundling).
This shows up all over the place. Governments can force health insurance providers (private or governmental) to bundle both unprofitable at-risk patients together with profitable healthy patients. A fly-by-night insurance provider can swoop in and offer lower premiums to those profitable healthy patients. Nominally this seems great! Lower rates for folks who don't need it (similar to the garbage scenario, garbage gets picked up for those people dumping valuable garbage!). But now the incentive structure is getting pretty messed up and those at-risk patients are vulnerable to a lot of rate hikes since the premiums paid by healthy patients are being "skimmed" away.
Put another way, bundling goods and services in certain ways lets you control incentives, which can be used for good or bad ends. However, surreptitiously unbundling those things after there's already been an agreed-upon bundling can wreak havoc on that initial incentive structure.