Energy and Health Care Parallels:   Maximizing Electric Utility Social Welfare.

Reynolds, Douglas

Publication

Energy and Health Care Parallels: Maximizing Electric Utility Social Welfare.

Reynolds, Douglas

Abstract

This pod cast, based on a paper from the 4th IAEE Eurasian Conference in Nur-Sultan, Kazakhstan, is about electric power markets. It considers consumer sovereignty in U.S. health care markets and then looks at the parallels between those health care markets and electric power markets. It then shows how one particular U.S. health care market mechanism called the Advantage Medicare System works best. It then explains how an Electric Power CEO bonus system, based on the Advantage System, can create better, more socially maximizing outcomes for electric power markets than the current consumer sovereignty based systems the world is using now.

Description

Consumer sovereignty is often considered one of the most powerful forces in all of economics, by such authors as Hayek. However in free markets, such as health care, the U.S. shows higher than average costs with lower than average results, except for the U.S. Medicare Advantage program which is based on an incentivized system. Indeed, all of the top world corporations use CEO incentivized bonuses to create shareholder value, so why not employ such a scheme with electric utilities? Such a CEO bonus scheme would reward the utility CEO not for raising prices, but for lowering them. And crucially there would be a bonus for reducing greenhouse gas emissions.