What have you always wondered about the economy? Tell Us
Commentary

Insurers must be forced to compete

Marketplace Staff Dec 16, 2009
HTML EMBED:
COPY
Commentary

Insurers must be forced to compete

Marketplace Staff Dec 16, 2009
HTML EMBED:
COPY

TEXT OF COMMENTARY

Kai Ryssdal: Commentator Robert Reich points out that another time-tested way to cut costs in the health-care system — competition — is strangely missing from the Senate debate.


Robert Reich: The health-care bill now moving perilously through the Senate still relies overwhelmingly on private, for-profit insurers. They don’t compete very much against one another and will have every incentive under the bill to compete even less.

The bill gets rid of the public option and lets people who aren’t covered by their employers buy into a system similar to the plan that federal employees now have. The federal government’s Office of Personnel Management selects from among private insurers.

But that’s no answer. Premiums under the federal employee benefit plan increased nearly 9 percent this year — in part because of insufficient competition among the private insurers it depends on.

According to data from the American Medical Association, only a handful of insurers dominate most states. In nine states, two insurance companies control 85 percent or more of the market. In Arkansas alone, the Blue Cross plan controls almost 70 percent of the market.

In light of all this, you’d think the Senate bill would at least subject the insurance industry to the antitrust laws. But no.

Remarkably, the Senate bill still keeps Big Insurance safe from competition by preserving its privileged exemption from the antitrust laws.

This makes no sense. Without a public option to compete against private insurers, and without antitrust laws to make sure they’re competing against one another, insurers have every incentive to combine into a handful of giant companies that will suck every health dollar out of our pockets.

If Americans are going to be required to get health insurance, health insurers have to be forced to compete, one way or the other.

Ryssdal: Robert Reich is a professor of public policy at the University of California, Berkeley.

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.