Debunking 'The Debunker' Part II: Promoting Competition Between Health Insurers Through A Public Option

Following his Saturday radio address which I discussed in my last blog, the President continued his 'pitch' for a government run Public Option by further vilifying insurers monopolistic control of the marketplace. Monday's news coverage focused on how Blue Cross completely dominated certain states to the detriment of consumers, the presumption being that monopolistic control of a market automatically resulted in artificially high premiums. My own experience differs from what I read yesterday.

Our insurance agency focuses on group coverage for small to medium sized businesses. In southeastern Wisconsin four insurers dominate this segment. They are Anthem Blue Cross (12%), Humana (20%), Unitedhealthcare (28%) and WPS Health Insurance Company (13%). The numbers in parentheses represent the respective insurers' market share for just our own client base and fall well below 100%; the remainder of our clients are (partially) self-funding using a variety of Third Party Administrators (TPA's) and stop loss insurers.

Three of the four insurers above are publicly traded insurers while one is a non-profit. To listen to 'The Debunker' one would assume the non-profit insurer would dominate the market. Parenthetically, a couple of mutual insurers do business in Wisconsin but their rates are not competitive. One might then conclude that insurer profits are not the driver of health care premiums. Beyond that, the 23% of my client base that self funds is disproportionately low compared to figures gathered by the Wisconsin Insurance Commissioner. The last time I checked, I think OCI was reporting about 37% of Wisconsin residents are covered under self-funded health plans.

I think you can see there already is robust competition in Wisconsin amongst those who employers hire to pay for health care. In contrast, just a couple of health systems dominate each city/region. Many would argue there is a need for more competition amongst those who deliver health care. It begs the question, if the government offered health care to all Americans through say, an expansion of the VA, wouldn't that foster competition between providers of care? (In fact, the government inhibits competition through laws that have frozen expansions of physician owned and/or for profit hospitals.)

Competition in the health insurance marketplace is important and through its regulatory authority, government plays a critical role. That role should be expanded to promote price transparency and the development of interoperable electronic medical record keeping. Going beyond that - to the proposed Public Option - is a Trojan Horse for a complete government takeover.