…by Meg White
The place Meg puts the stuff she wrote
GAO Study Confirms the Obvious About Health Insurance: Fixed Markets Claiming to be Free Markets Need Competition
Categories: Commentary, Healthcare

by Meg White

You know that stuff we all learned about free markets and competition in Econ 101? Turns out it actually applies to the health insurance industry.

Yesterday the Government Accountability Office (GAO) released a letter to Antitrust, Competition Policy and Consumer Rights Subcommittee Chairman Herb Kohl (D-WI). The agency’s letter accompanied a report concluding a study of competition in the health insurance industry commissioned by the senator.

The GAO looked at 41 peer-reviewed articles published between January 1990 and March 2009 that examined competition in the private health insurance industry from a variety of angles. With all the input, several of the cases examined did not have clear-cut conclusions. For example, in the case of reimbursement rates, sometimes competition raised the amount of money doctors and hospitals were paid, and other times the opposite occurred.

Considering the wide time range and the fact that these studies were based on states and smaller geographic regions, variation in conclusions is perhaps unsurprising. However, two key elements to the runaway costs of health insurance in this country had unambiguous results.

The GAO found that competition led to lower premiums for customers and lower profits for health insurance companies, stating that “greater competition was associated with lower profits,” and that “more competitive markets were associated with lower premium rates.”

Masters of the obvious, unite! To anyone with even the tiniest grasp on free markets, the conclusion of this study makes sense: Competition is good for the consumer, not the conglomerate shareholder.

But will anyone read this 11-page letter outside Sen. Kohl’s office?

I doubt this document will make much of an impression on the other side of the aisle. It seems Republicans feel truly free market competition is only good when it applies to arguments for deregulation, not actually breaking up monopolies.

And it certainly didn’t make a splash in the news. Maybe that’s because it’s stating the obvious. But much as the obvious needs to be stated in other healthcare reform debates (for example, repeatedly confirming that death panels do not exist) I’d like to invite the much-maligned “Captain Obvious” to the healthcare debate.

At the very least, a captain-of-the-obvious approach for healthcare reformers would certainly take some of the burden off the poor folks at the Annenberg Center’s FactCheck.org. In a weary blog entry posted last Friday and tellingly titled “TGIF,” fact checker Joe Miller begins as follows:

August traditionally may be a slow news month in the nation’s capital, but the bogus claims have continued to fly in the final full week of meteorological summer. This week, we’ve written about health care, health care and, oh yeah, more health care.

That same day, Fact Check produced a refutation of one popular chain e-mail containing a whopping 26 lies (along with a handful of misleading claims for good measure) about healthcare. Many of them are so nonsensical that they fall into a category of items that could be combated with, well, a mastery of the obvious. There are so many, and Fact Check does such a great job of refuting them, I urge you to check out the original post. But for argument’s sake, let’s take just one of the more obviously bogus claims:

Page 195: Officers and employees of Government Health care Bureaucracy will have access to ALL American financial and personal records.

Fact Check rates this claim as false, pointing out that the section the e-mail author refers to “says that government employees of the health insurance exchange will have access to federal tax information for purposes of determining eligibility for affordability credits available for low- and moderate-income Americans. In other words, in order to qualify for a government subsidy to purchase health insurance, the government needs to confirm your income. And, no surprise, the government already has access to your federal tax information. The bill also says nothing about ‘ALL… financial and personal records.’”

But if you take a look at this claim through the eyes of a Captain Obvious, one has to wonder whether this e-mailer has ever heard of the IRS. Furthermore, why would the government seize any and all of your financial information? And doesn’t it just make sense that if you’re going to be approved to get a discounted health insurance plan, you should be able to prove that you qualify? Do we really want millionaires scamming the system for free healthcare?

I propose the DNC begin a slap-me-on-the-forehead-duh-hey movement, wherein they address these healthcare reform concerns head on, but with a wry smile. A sample suggestion might read something like this:

Do you really believe that your government is run by a bunch of socialists who want to kill your grandma, insure illegal immigrants but deny coverage to disabled people and pre-determine for you every healthcare choice in your life? Do you really believe that every time H.R. 3200 uses the word “community” that it’s referring to the nonprofit known as ACORN? I mean, really?

The answer should be obvious.


Originally published at BuzzFlash.com.

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