Obama Points to the Lack of Insurance Competition, a Problem His Plan No Longer Solves

The Obama administration, in its push to get the House to vote for
the Senate's health care reform bill unchanged, is pointing to the
serious issue of lack of competition
in the health insurance market as a powerful reason for reform. Obama's
health care proposal, however, no longer does much to actually solve
the problem. From the White House Blog:

On Wednesday, a leading insurance broker laid out in clear terms
what many Americans could already guess: the insurers' monopoly is so
strong that they can continue to jack up rates as much as they like -
even if it means losing customers - and their profits will continue to
soar under the status quo.

Speaking about the lack of competition - a key target of reform -
broker Steve Lewis told investors on a conference call organized by
Wall Street giant Goldman Sachs:

"Not only is price competition down
from year ago (when we had characterized last year's price competition
as being down from the prior year), but trend or (healthcare) inflation
is also up and appears to be rising. The incumbent carriers seem more
willing than ever to walk away from existing business resulting in some
carrier changes..."

The few elements of this health care reform push that could have
helped deal with the issue of "insurers' monopoly" have been removed,
and Obama is making no effort to add them back. In fact, his
administration is actively trying to suppress attempts by others to
reintegrate such measures into the legislation.

Repealing the anti-trust exemption was in the House bill-but it is
not in the Senate bill or Obama's health care proposal. Also in the
House bill, but missing from Obama's proposal, is a national exchange
and a national public health insurance option. All three proposals
could have helped with the issue of the monopoly power of insurers.

The Senate bill does, technically, contain money for new insurance
co-ops, but Kent Conrad (D-ND) and Max Baucus (D-MT) completely
crippled the co-ops with weird restrictions, which will protect the
current health insurance companies. The bill calls for one co-op per
state, even though that is unfeasible in small/mid-size states, and
co-ops are legally prevented from pooling their negotiating power to get better rates with providers. Baucus so crippled the co-ops program that the CBO says they are basically destined to fail.

If Democrats really want competition among many non-profit
insurers-like in Belgium, Germany, Japan, and Switzerland-and want to
bring down cost, then they need to create a central reimbursement negotiator
that would result in an all-payer system. Only when all insurers are
paying the same reimbursement rates, can new, small competitors ever
hope of breaking into a new market. As long as large size allows the
big monopoly insurers to get better rates with providers, you will
always have market share snowballing to a few big insurance companies.

The lack of competition, the monopoly power of the insurers, is a
huge problem with our health care system. Unfortunately, the Obama
administration has not made taking on the big insurance companies a
policy priority, and the president's proposal does not take the big
steps to fix the problem. If Obama really thought the reports, like
this one from Goldman Sachs, were the reason we need health care
reform, he would be fighting to include actual solutions to the
problem, like repealing insurers' anti-trust exemption, creating a
public option, a national exchange, a central reimbursement negotiator
(all-payer system), and/or making the co-ops at least workable.

Join the Movement: Become Part of the Solution Today

We're optimists who believe in the power of informed and engaged citizens to ignite and enact change to make the world a better place.

We're hundreds of thousands strong, but every single supporter counts.

Your contribution supports this new media model—free, independent, and dedicated to uncovering the truth. Stand with us in the fight for social justice, human rights, and equality. As a people-powered nonprofit news outlet, we cover the issues the corporate media never will. Join with us today!

© 2023 FireDogLake