Few Health Insurers Dominate Around America, Band Against Public Plan
Because most regions of the United States have only one or two major insurers, the groups are finding it easier to band together to rise up against Congressional proposals, such as the one to create a public plan, Business Week reports.
"Each year the American Medical Assn. (AMA) surveys the commercial health-insurance landscape and finds little if any competition. Its latest report says that, out of 314 metropolitan markets, 94% are controlled by one or two companies, or fewer. In 15 states, one insurer has 50% or more of the entire market. Such market concentration has become a potent argument for supporters of a public insurer, President Barack Obama among them. With no need to generate profits, a public plan could offer lower premiums, thus bringing competitive pressure to bear on the private insurers to do the same."
Insurers are pushing back against that idea, using data from the Lewin Group, a subsidiary of the UnitedHealth Group that says 103 million Americans would leave their employer-based coverage in favor of the public one. But The Congressional Budget Office estimates that only up to 10 million would switch by 2019. "Karen Ignagni, president of the lobbying group America's Health Insurance Plans (AHIP), told Congress in a letter that a public plan would 'significantly increase costs for those who remain in private coverage.'" Insurers argue that they are already offering to cut costs in other areas like charging higher premiums to the sick and denying coverage based on pre-existing conditions.
Business Week notes that insurers take the position that, with as many as 1,300 companies in the business, it can be cutthroat. 'It doesn't feel like the market is not competitive to us,' says Brad Fluegel, chief strategy officer for WellPoint, the largest U.S. insurer" (Arnst, 7/23).