When Does a Health Insurance Merger Become a Monopoly? Will It Make Healthcare Worse?

A BUZZFLASH NEWS ANALYSIS
by Christine Bowman

BuzzFlash already took a close look at what author and Washington Post correspondent T.R. Reid has to say about America's healthcare future. After studying healthcare systems in other nations worldwide, he concludes that the U.S. should not commit itself to working with, and essentially backing, for-profit health insurance companies.

"I said to them -- mandating for-profit insurance is not the lesson from other countries in the world ...

"Doctors, hospitals, nurses, labs can all be for-profit," Reid said. "But the payment system has to be non-profit. All the other countries have agreed on that. We are the only one that allows health insurance companies to make a profit. You can't allow a profit to be made on the basic package of health insurance."

Corporate Crime Reporter 

With this article, BuzzFlash will expand our look at the for-profit health insurance industry, wirh particular reference to business writer Bruce Japsen's report in The Chicago Tribune, "Health Insurance Mergers Could Be Painful, Critics Say." Japsen writes that "Speculation has run rampant that some of the nation's biggest health plans may be looking to consolidate ..." Japsen and the experts he consulted -- among them the president-elect of the American Medical Association (AMA) and the general counsel for the American Hospital Association (AHA) -- believe mergers by insurers could spell even more trouble for America's beleaguered healthcare consumers.

What it comes down to is that what's good for insurance industry CEOs and stockholders is not necessarily good for people seeking care. Insurance industry spokesmen such as Aetna's Fred Laberge tout mergers as a means to add services, achieve efficiencies, and manage costs. But Japsen notes, "Medical care providers say the promise of efficiencies historically has not lowered premiums to consumers." And currently, a problem preventing insurers that might merge from actually achieving administrative savings is that different companies don't share compatible IT platforms and software.

What's more, consolidation among insurers could reduce consumers' choices at a time when the Obama administration's proposed reforms are posited on the need for lively competition among insurers. In a supposed free-market model, where is the incentive to control costs and offer competitive prices if there are few, if any, competitors for customers in a given market?

As the AHA's Melinda Hatton told Japsen, "In general, hospitals do worry if the super-insurers get bigger." When more companies compete, it puts "pressure on the insurers to keep their offerings competitive and their prices competitive." Of course, the converse is that, with fewer companies, one would expect less pressure on insurers to offer lower prices to businesses or individuals buying health insurance.

Already, one in six metropolitan areas is dominated by a single health maintenance organization (HMO) or preferred provider organization (PPO), the AMA says. AMA president-elect Dr. James Rohack spells out the problem: "It becomes difficult for patients to have choice and doctors to get their patients the care that is needed because a monopoly has been created. Patients don't have as many other options." Japsen reports that "some medical-care providers believe the Justice Department's antitrust division may look more closely at any merger."

Back when "managed care" first emerged on the American healthcare scene, it promised to deliver lower costs and greater efficiencies than traditional insurance plans. What actually materialized over the long run was less choice of providers and services for consumers; lower reimbursements and nightmarish paperwork for doctors and hospitals; and radically higher costs for businesses that purchased healthcare coverage for their employees. And the winners? The major insurance companies. With continuing consolidation, won't the same scenario play out once again?

About one thing there is little debate. Providing Americans with healthcare the old-fashioned way has put a stranglehold on many American companies and made them unable to compete internationally. Just this year, healthcare costs have skyrocketed another 8-10 percent for large comapanies, and more for small ones.

Ironically, many in Congress, and especially the ideologically "conservative" GOP members, argue that "socialized" medicine or any kind of bigger government role would reduce individual choice and control. That danger seems greater still if control is ceded to the mega-insurers and especially if there is inadequate regulatory oversight. Invoking "Big Brother" government does scare people, but empowering big business as a middleman between the sick and their healthcare providers has been no cakewalk either. Perhaps there's a "free market" lesson to be learned here from the banking and finance meltdown. Granting freedom without oversight to for-profit businesses engaged in essential services leads to irresponsibility. Government, while cumbersome, at least is not self-interested in the way that corporations must be.

In the American healthcare equation of winners and losers, the biggest insurance companies (along with big pharmaceutical companies), so far, have come out on top. Could it be that their 'investment" in K Street lobbyists and hefty campaign contributions has paid even greater dividends than the stock dividends they pay to their own investors?

Was the supposed freedom to choose one's healthcare providers lost decades ago? Aren't healthcare providers, our family doctors and the hospitals on Main Street, the more natural allies to consumers than consolidated, for-profit, middle-man insurance companies?

A BUZZFLASH NEWS ANALYSIS

Technorati Tags: Analysis Healthcare Insurance Mergers Choice