The Least, First

Monte Asbury's blog

Health insurers near monopoly control of most markets

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Private insurance makes a lot of cents for the...
Image by Steve Rhodes via Flickr

I thought I understood why insurance companies were the main threats to a “public option.” It’s easy.  Their overhead—exec salaries, advertising, political lobbying, etc.—averages 31%.  Medicare’s overhead is 1%.  No duh they don’t want to compete.

Today, I found out there’s another reason:  they mostly don’t even compete against each other. Consumers in 94% of America’s insurance markets buy their health insurance from near-monopolies that dominate their region.  The Bigs don’t want to avoid public competition, they want to avoid any competition.

And what happens when profit-makers don’t have to compete? You know what.

Premiums have risen 87% over the last six years, while profits at the ten Bigs rose 428%.  Wait a minute: If your insurer’s profit is up 400%, why are your premiums rising so fast?

So, on with the debate:  Sen. Richard Shelby (R-AL), speaking on Fox News, defended the insurance company position, saying a public option would “destroy the marketplace for health care.”

But TPM today covered a report by Health Care for America Now, saying:

clipped from tpmmuckraker.talkingpointsmemo.com
[T]he notion that most American consumers enjoy anything like a competitive marketplace for health care is flatly false. […]
The report … uses data compiled by the American Medical Association to show that 94 percent of the country’s insurance markets are defined as “highly concentrated,” according to Justice Department guidelines. Predictably, that’s led to skyrocketing costs for patients, and monster profits for the big health insurers. Premiums have gone up over the past six years by more than 87 percent, on average, while profits at ten of the largest publicly traded health insurance companies rose 428 percent from 2000 to 2007.
HCAN describes the situation as “a market failure where a small number of large companies use their concentrated power to control premium levels, benefit packages, and provider payments…”
[O]ne former top Federal Trade Commission official … has sent a letter to the Justice Department’s Antitrust Division, asking for an investigation into the health insurance marketplace.
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And maybe that’s why millions of your excess insurance premium dollars are being spent on defeating a public option, rather than on reducing your premium.

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  1. […] Monte Asbury puts it in his blog The Least, First: I thought I understood why insurance companies were the main threats to a “public option.” […]

    Anargyri « Khanya

    June 30, 2009 at 10:27 pm


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