Insurers must be forced to compete
A way to cut costs in the health care system is competition, but it's strangely missing from the Senate debate. Commentator Robert Reich says if Americans are going to be required to get health insurance, that must change.
Robert Reich (Robert Reich)
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TEXT OF COMMENTARY
Kai Ryssdal: Commentator Robert Reich points out that another time-tested way to cut costs in the health-care system -- competition -- is strangely missing from the Senate debate.
Robert Reich: The health-care bill now moving perilously through the Senate still relies overwhelmingly on private, for-profit insurers. They don't compete very much against one another and will have every incentive under the bill to compete even less.
The bill gets rid of the public option and lets people who aren't covered by their employers buy into a system similar to the plan that federal employees now have. The federal government's Office of Personnel Management selects from among private insurers.
But that's no answer. Premiums under the federal employee benefit plan increased nearly 9 percent this year -- in part because of insufficient competition among the private insurers it depends on.
According to data from the American Medical Association, only a handful of insurers dominate most states. In nine states, two insurance companies control 85 percent or more of the market. In Arkansas alone, the Blue Cross plan controls almost 70 percent of the market.
In light of all this, you'd think the Senate bill would at least subject the insurance industry to the antitrust laws. But no.
Remarkably, the Senate bill still keeps Big Insurance safe from competition by preserving its privileged exemption from the antitrust laws.
This makes no sense. Without a public option to compete against private insurers, and without antitrust laws to make sure they're competing against one another, insurers have every incentive to combine into a handful of giant companies that will suck every health dollar out of our pockets.
If Americans are going to be required to get health insurance, health insurers have to be forced to compete, one way or the other.
Ryssdal: Robert Reich is a professor of public policy at the University of California, Berkeley.
Comments
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From Omaha, NE, 12/17/2009
I respect Robert but his report has a few errors .... or is it just a lack in continuity?
Cutting Insurance Premiums is not the same as cutting health care costs. If the costs involved in providing health care could be contained, insurance premiums could adjust accordingly. At the end of the day your insurance provider has to pay the claims according to their contract. If insufficient revenue is collected to cover the risk, the company fails and everybody loses.
The Health Insurance industry is not getting rich off of our premiums. Just look at some of the major players that have opted out of most of the market (i.e. Mutual of Omaha for one.)
Secondly, this notion of creating a public option is totally misguided. The Idea that a public option would help force down the premiums of Blue Cross and Blue Shield of Arkansas is a bit off the mark. 70 percent of Arkansas is insured currently by a non-profit organization by the name of ......(are you ready for this?) Blue Cross and Blue Shield of Arkansas.
It's funny how overlapping commentary can misinform the public. In my opinion, if the government wants to get into the health insurance business they had best watch out for the unintended consequences. Things like Insurance Providers bailing out of the market and taking advantage of this opportunity to venture into more profitable exploits.
T Mann
From New York, NY, 12/17/2009
This antitrust give away that the congress has bestowed on the insurance companies demonstrate the extent to which both parties are in bed with the insurance companies so what can we expect from this bill?
Is allowing recipients of food stamps to purchase vitamin supplements even discussed as a way to work on the prevention side of health care reform while stimulating the economy?
From Portland, OR, 12/17/2009
Robert Reich does not reference specific changes private insurers could or would take to reduce premium costs in the face of such "competition?" Insurance profits are about 3% of premiums -- 97% are payments to health providers and administration. Seems that insurance companies are already incentivized to reduce costs. So how do you reduce costs further with increased "competition" with a public option?
From Ely, MN, 12/16/2009
One of the myths out there is that we can choose the doctor we see. I belong to a state health plan and I cannot go to any clinic other than my primary one. How do I know this? I had an appointment made at the Mayo Clinic as a follow up to a possibly cancerous condition. I chose to go to Mayo because they had a new procedure.
Then my insurance changed to the state plan (a
decision made by the school district where I used to work and still maintained coverage). The new plan required a doctor's referral. I went to the doctor, thought I had the referral, and kept my appointment at Mayo. When I was billed by Mayo because I did not have a referral I thought it was a mistake.
What I found out was that there is a committee that decides if you actually get the referral. That you will never get a referral if your primary clinic can treat you, even if there's better treatment available. That the primary clinic has to pay if they give the referral, whether to the other clinic or to the insurance company I was not told.
So folks, if you have a life threatening condition and want to look for the best treatment you can find - with many policies you can look but you can't choose. Unless you can pay for it yourself.
From CA, 12/16/2009
AMEN ROBERT REICH - amen. But even the public option that WAS in the bill before was so diluted, it's questionable whether it would've done the job.
We are waiting for someone to specify what is defined as "affordable". Currently, the senate healthcare bill has good stuff in it but ALL those good things will be the privilege of only those who can afford a health insurance policy. The rest of us (i.e., MOST Americans) will continue to die or go broke unable to afford an ins policy at all.
From Hartford, CT, 12/16/2009
Reich makes a good point. There isn't much in the Senate bill that curbs cost or helps citizens. More and more, the Senate waters down its bill, and the less groundbreaking and historical it becomes. I hope the bill will improve when legislators try to merge it with the House bill.
12/16/2009
Unlike Robert Reich, I don't find it strange that the "time-tested way to cut costs in the health-care system -- competition" is missing from the Senate debate. The reality is they're not interested in cost. They're interested in POWER. They just want to get gov't in position to run the show and I think many Senators will do whatever it takes to make that happen. Hence their focus on establishing a public option (which thankfully sounds defeated now).
From Richmond, TX, 12/16/2009
A reason to be careful in opening health insurance across state lines is that there is a high likelihood that health insurance companies will simply move to the states with the most lax coverage requirements. That doesn't mean that such legislation shouldn't be past. It is just that corp execs have a way of leveraging legislation that is intended to benefit the consumer such that unintended consequences happen.
I am for some "forced" competition at this point. It is clear "from history" that the health care insurance companies are not going to get the job done on their own. And if that doesn't work, let's get to single payer as quickly as possible.
It is true that the USA has the best "Trauma" care in the world. But leave out trauma... and i believe it is hard to argue that the USA is the best. Good ... yes. Amount the top... in some areas maybe...
One place we are always in the front of the pack though...
COST!!
SO tell me again how private health care is going to solve this problem....
From New York, NY, 12/16/2009
Robert Reich for Senate! And 59 of his closest relatives, too! Who are these clowns in Washington? I guess they're all on the payroll of industrial health complex. When will someone propose something that will help the citizens? I've almost been convinced by the argument that we should just hold our nose and be in favor of the health bill and hope it gets better over time. But it's so bad now, I'm not sure that's wise anymore. Oh well, we'll just wait another 25 years and hope for the best.
From Milan, MI, 12/16/2009
I agree that the insurance industry badly needs competition, and the federal government has the power to provide it. I strongly disagree that any "public option" will serve, simply because it will simply become the new monopoly, while history and the American public agree that a single-payer government-run health plan is something we desperately need to avoid. The easy way to instantly generate competition in the insurance market is to allow consumers to buy insurance from providers in other states; a large part of why there is so little competition in some markets is those states' excessive minimum coverage requirements.
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