Throughout the legislative process politicians have talked about how competition is critical to making health insurance affordable.
The reality is for most of the United States there is no competition. Big insurance companies dominate the market. Extreme health insurance industry consolidation has resulted in a small number of large companies using their concentrated power to control premium levels, benefit packages, and provider payments in the markets they dominate. As a result, health insurance premiums have skyrocketed, going up more than 87% – on average – over the past six years.
A report published earlier this year found that in the past 13 years, more than 400 corporate mergers have involved health insurers, and a small number of companies now dominate local markets but haven’t delivered on promises of increased efficiency. According to the American Medical Association, 94% of insurance markets in the United States are now highly concentrated, and insurers are thriving in the anti-competitive marketplace, raking in enormous profits and paying out huge CEO salaries. Profits at 10 of the country’s largest publicly traded health insurance companies rose 428% from 2000 to 2007. In 2007 alone, the chief executive officers at these companies collected combined total compensation of $118.6 million—an average of $11.9 million each. That is 468 times more than the $25,434 an average American worker made that year. Moreover, the health insurance industry invests more in buying back its own stock and rewarding its shareholders than in improving system operations, reducing premiums, or in developing ways to pay doctors and hospitals fairly.
The insurance industry has been exempt from anti-trust laws since the 1950s. The exemption, known as McCarran-Ferguson, cedes regulatory control of the industry, on the business side, to individual states. But repealing the antitrust exemption would give the federal government more authority to oversee the business side of health insurance companies — something states now have the sole authority to monitor.
Earlier this year the insurance industry put out a report that indicated if the “reform” bill passed there would be a 111% increase in insurance premiums over the next decade. In response the Congress and President Obama threatened to repeal McCarran-Ferguson. At the time Majority Leader Harry Reid said “It’s something that should have been done a long time ago.” As for insurance companies he went on to say: “There isn’t anything we could do to satisfy them in this health care bill. Nothing. They are so anti-competitive. Why? Because they make more money than any other business in America today. . . .What a sweet deal they have.”
Sadly, when Sen. Reid introduced his health care bill in the senate yesterday he did not include an end to McCarran-Ferguson. Luckily, the House did include repeal of the exemption in their bill so this will be an issue dealt with by the Conference Committee that merges the two bills.
But, don’t hold your breath. The insurance industry is spending millions of dollars every day and has six lobbyists for every one elected official working to protect the industry’s profits. They’ve donated tens of millions of dollars to elected officials of both parties. It would be surprising if Congress did anything to upset their paymasters.
In fact, the bills being considered in Congress are essentially a giveaway to the insurance industry. Millions of Americans will be forced to buy insurance — under threat of increased taxes and criminal prosecution. This will result in hundreds of billions of dollars in new annual revenue. It is essentially a massive transfer of wealth from working Americans — whose salaries are stagnate, jobs are insecure and already massively in debt — to the insurance industry and their multi-million dollar executive salaries.
The truth is one of the root problems of America’s health care crisis is the insurance industry which puts profits before patients. The insurance industry should not be part of the solution. The only way to really provide all Americans with health care, control costs, allow businesses to compete and hire employees as well as improve health care is a national health plan paid for by a single payer, the U.S. government. This would simply involve expanding and improving Medicare so it covered all Americans. Medicare is less expensive, less bureaucratic and provides consumers which free choice of doctors, health care providers and hospitals — not limited to insurance company approved lists. The truth is insurance adds nothing to health care except bureaucracy and overhead but you will not hear that from many members of Congress who are addicted to their campaign contributions.
Providers must elect to participate in Medicare. This new plan will draw $500 billion from Medicare just as baby boomers are entering. Benefits will have to be limited, care rationed with HMO like systems. A state run system will also cause huge job losses in health care due to low pay despite millions of new Medicaid patients.