by Michael D. Tanner
President Obama has repeatedly said that one of his "reform" goals is to increase "competition and choice" in the US health-care system -- but the policies he's pursuing would actually reduce competition and give consumers fewer choices. Meanwhile, he's ignoring reforms that would bring more choices and competition.
The nation now has some 1,300 insurance companies, but most consumers actually have far fewer choices. An American Medical Association survey found that in 299 of 313 largest metro areas, one insurer controls at least 30 percent of the market.
In New York, just two insurers, GHI and Empire Blue Cross, represent 47 percent of the market. In New Jersey, a single insurer, Horizon Blue Cross and Blue Shield, controls 43 percent of the market. And in Connecticut, Wellpoint holds an astounding 55 percent.
There's nothing inherently wrong with one company earning a large market share, but the lack of significant competition helps contribute to higher insurance costs and poorer service. Moreover, this market concentration hasn't necessarily flowed from consumer preference in a free market, but results in good part from barriers to entry erected by state insurance regulation.
Obama's answer to this problem is to set up a new government-run insurance plan to compete with private insurers. But such a plan will ultimately result in less competition, not more.
A government-run plan would have an inherent advantage in the marketplace, because it ultimately would be subsidized by taxpayers. The government plan could keep its premiums artificially low or offer extra benefits, because it could turn to taxpayers to cover any shortfalls.
Michael Tanner is a senior fellow at the Cato Institute and coauthor of Healthy Competition: What's Holding Back Health Care and How to Free It.
Added to cato.org on August 13, 2009
This article appeared in the New York Post on August 13, 2009.
No comments:
Post a Comment