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Health Consolidation Slammed

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WASHINGTON BUREAU — A consumer group is asking the U.S. Department of Justice to start an antitrust probe of health insurers.

The group, Health Care for America Now, Washington, says in a report that 13 years of “extreme” health insurance industry consolidation has resulted in a market failure.

A small number of large companies are using their concentrated power to control premium levels, benefit packages, and provider payments in the markets they dominate, the group says.

“As a result, health insurance premiums have skyrocketed, going up more than 87% — on average – over the past 6 years,” the group concludes.

HCAN is pushing for inclusion of a new public health insurance option in health reform efforts.

Susan Pisano, a vice president at America’s Health Insurance Plans, says antitrust probers have maintained heavy scrutiny of the health care industry for decades.

The probers “have concluded that health plans operate in a highly-competitive market,” Pisano says. “They also concluded that consumers have choice among various kinds of coverage and among various insurers.”

Moreover, she says, “the purpose of antitrust laws is to protect consumers and not to advantage providers nor to advance a political agenda.”

HCAN says in its study that health insurers have completed more than 400 mergers in the past 13 years, and that a small number of insurers now dominate local markets.

Figures from the American Medical Association, Chicago, show that 94% of the health insurance markets in the United States are now highly concentrated, and insurers are thriving in the anti-competitive marketplace, “raking in enormous profits and paying out huge CEO salaries,” HCAN says.

Profits at 10 of the country’s largest publicly traded health insurance companies rose 428% from 2000 to 2007, HCAN says.

In 2007 alone, HCAN says, “the chief executive officers at these companies collected combined total compensation of $118.6 million–an average of $11.9 million each. That is 468 times more than the $25,434 an average American worker made that year.”

HCAN says the health insurance industry invests more in buying back its own stock and rewarding its shareholders than in improving system operations, reducing premiums or developing ways to pay doctors and hospitals fairly.

David Balto, former policy director of the Federal Trade Commission and now a senior fellow at the Center for American Progress, Washington, sent a letter co-signed by HCAN to the U.S. Department of Justice Antitrust Division.

Balto and HCAN ask for a comprehensive investigation into the health insurance marketplace.

“To try to reform health care in the current market structure is like setting sail across the Atlantic on a raft,” Balto says.

While renewed antitrust and consumer protection enforcement is essential, “it is not sufficient to begin to restore some semblance of a functioning market,” Balto says.

“Only a public health insurance option will be able to force private insurance companies to adopt new pro-consumer policies,” Balto says.

Balto charges that antitrust enforcers “have been asleep at the switch for the past several years and have permitted health insurers to acquire monopolies in dozens of markets.”

“Consumers have paid a steep price for this merger mania in higher prices, deceptive and fraudulent practices, and ultimately assembly line health care,” Balto says.


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