Let insurers compete
Maneuvering on health care reform must seek improvement, not protection
It is one thing for the nation's big health insurance providers to object to a plan that would have them competing against a government-owned health insurance offering. It is quite another to hear them object to the idea of more competition from one another.
Health reformers in the White House and in Congress, stung by what they see as turncoats among insurers who had been supporting reform, are moving to revoke a 64-year-old anti-trust exemption for health insurance. Given that most health insurance markets are dominated by one or two providers, removing that exemption would be a good idea. So would the proposal, put forward by members of both parties, to give health insurers much more latitude to sell their products across state lines.
Most of the checks Americans write for health care costs aren't written to doctors or hospitals. They are written to health insurance companies, often by employers who have just deducted significant payments from the checks they write to their own employees. That's why the road to affordable health care has to pass through the insurance industry.
Consumer choice in health care has limited benefits. Markets work when consumers can evaluate not only the cost, but the worth, of competing products, and can walk away if none of the options suits them. Such freedom is of questionable utility for people seeking a heart specialist, and downright useless for those in need of an emergency surgery. But market choice can, in theory, work in the selection of health insurance plans. It is something that can be done in relative leisure, often with the aid of experts who work for your employer, your union or some other ally.
In health insurance, big is not always bad. Big allows a company to not only jawbone providers into affordable fees, it can also spread the risk over a sustainable number of customers. But if big is a result of one company squeezing out all of the competition and then jacking up rates, disallowing claims and putting the screws on patients and doctors alike, there needs to be a law that allows — that requires — the feds to step in.
Early on, the reformers' deal with the devil was a mandate that everyone buy insurance, with federal subsidies if necessary, in return for a requirement that the industry sell to everyone, regardless of pre-existing conditions.
Insurers' fear that the individual mandate in some versions of reform wasn't strong enough caused it to turn on the White House, badmouthing some plans and claiming they'd drive up costs for everyone. The threat to remove the industry's anti-trust status was the reformers' counter punch.
Both sides have a point.
If the nation benefits from competition among health plans, then let's see a lot more competition. The way to judge whether a public option is a good idea is whether it spurs the kind of competition that benefits consumers — lower rates, better service — or kills it.
If health insurance companies are such tender flowers that they cannot stand up to robust competition among themselves, it is difficult to see why the American people, and their government, should make any effort to protect them in a reformed health care system.
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