Health Insurance Monopolies Strangling States

Need more proof that health insurers are cowardly monopolies that wouldn't last ten minutes against real competition? Talking Points Memo has it.

This won't come as the slightest surprise to those versed in health care policies issues. But I fear it's only barely permeated the health care reform debate in the country, certainly in Washington. And that's this: the opposition to a so-called 'public option' comes almost entirely from insurance companies who have developed monopolies or near monopolies in particular geographic areas. And they don't want competition.

Note, I'm not saying more competition. I'm saying any competition at all. As Zack Roth explains in this new piece 94% of the health care insurance market is now under monopoly or near-monopoly conditions -- the official term of art is 'highly concentrated'. In other words, there's no mystery why insurance costs keep going up even as the suck quotient rises precipitously. Because in most areas there's little or no actual competition.

It's something everyone can understand that if you have only one widget maker, widgets will get really expensive, and probably decline in quality. And the widget makers will pour lots of money into Congress or whatever the law-making power is, to keep their monopoly in place because their monopoly ensures locked in profits. It's market theory 101 (or perhaps, rent-seeking 102, depending on your perspective.)

That's basically what this is all about. Read the piece, it will ... make clear why the opposition to a public option is about preventing competition.

Read the whole thing.

See the full report, with state-by-state breakdowns, here.

Kentucky does not have the worst monopolies, but it's far from a health care capitalist paradise.

Anthem Blue Cross and Blue Shield, a subsidiary of WellPoint Inc., is Kentucky’s biggest health insurer, with 51 percent of the state market. Together with Humana Inc., they hold 71 percent of the market.

Local markets are even more concentrated in Kentucky. In Elizabethtown, WellPoint and
Aetna Inc. together hold 92 percent of the market.

Health insurance premiums for Kentucky working families have skyrocketed, increasing
48 percent from 2000 to 2007.

For family health coverage in Kentucky during that time, the average annual combined
premium for employers and employees rose from $7,096 to $10,466.

When a firm has more than a 42 percent share of a single market, the U.S. Justice Department considers that market to be “highly concentrated.” This means that an insurer could raise premiums and/or reduce the variety of plans or quality of
services offered to customers with impunity.

Read the full Kentucky report here.