Competition in the health insurance business is a myth. Those who oppose President Obama’s public option are crying foul that a public option would tilt the insurance coverage playing field unfairly. Bull – the health insurance field is already tilted in favor of just a few insurance companies and is dominated in almost all markets by one or two companies which have swallowed up smaller companies and continue to grow, thus creating even less competition.
The American Medical Association’s 2007-2009 report on competition in the health insurance field finds that in the majority of Metropolitan Statistical Areas (MSA), a single health insurer dominates the market. Competition is undermined in hundreds of markets across the country.
Over the five years since the AMA’s first study, the country’s largest health insurers have continued to pursue aggressive acquisition strategies. The largest insurer, WellPoint Inc. (formed from the merger of Anthem Inc. and WellPoint Health Networks), has acquired 11 health insurers since 2000. The second-largest health insurer, UnitedHealth Group (United) has also acquired 11 health insurers since 2000.
In 2000, the two largest health Aetna and United, had a total membership of 32 million lives. As a result of mergers and acquisitions since 2000, the top two insurers today, WellPoint and United, each have memberships, respectively, of 34 million and 33 million, totaling more than 67 million covered lives.
While large health insurers have posted very healthy profits since 2000, premiums for consumers have increased without a corresponding increase in benefits. In fact, during the same time period, consumers have faced increased deductibles, co-payments and co-insurance. This has effectively reduced the scope of their health benefits coverage.
In our own Fort Wayne MSA, the two largest provides, WellPoint and Lutheran Preferred, control 52% and 23% of the market, respectively – those two companies alone control 75% of the Fort Wayne MSA. Not much competition there. The AMA’s report gives a picture of competition in all 50 states.
In Gary, Indiana, an area known for its poverty, two companies, HCSC (BCBS) and WellPoint control 68% and 24%, respectively. Two companies – 92% of the market. Hmm – where is the competition?
The American public is being sold a lie when the opponents of the public option cry that it will cut competition. Little competition currently exists, and, as the major insurance companies continue to aggressively swallow up smaller companies, even less competition will exist.
What the mega insurance companies really want is to control even more of the market and, God forbid, that a public option would get in the way.