Wednesday, May 20, 2009

The Health Care Lobby: Watch What They Do

These are salad days for Democratic lobbyists, because deep pocket interests - health insurance companies, Big Pharma, oil and gas and coal companies, the utilities and, of course, the banks - are buying them up to help harness the gale winds of change. Get ready to be dazzled - the strategies employed will reflect the imagination of Washington's most clever operators.

Outside the photo op, however, the reality was very different. A new report released today by Health Care for America Now, a leading citizens' coalition pushing for comprehensive health care reform, put the industry claims in sharp relief.

The HCAN report shows that after 400 mergers involving health insurers over the last 13 years, concentration has gone up in local markets across the country. The single largest provider of small group coverage (for small businesses, for example) controlled a median market share of 47% in 2008. The AMA says 94% of insurance markets in the US are highly concentrated.

The result, of course, is soaring prices - with premiums up, on average, more than 87% over the past six years. Profits at 10 of the country's largest publicly traded health insurance companies in 2007 rose from $2.4 to 12.9 billion (428%) from 2000 to 2007. The CEOs of these companies in 2007 alone collected an average compensation of $11.9 million each. Nice work if you can get it.

Insurers use their position to pass rising costs onto the insured. And, not surprisingly, Medicare does better. A recent study by University of California professor Jacob Hacker for the Institute for America's Future (which I co-direct) shows that from 1997 to 2006, private health insurance spending per enrollee grew at an annual rate of 7.3% while that of Medicare was at 4.6%, or more than one-third less.

The concentration of insurance markets and the lack of private competition provide compelling reasons for the Congress to establish a public plan like Medicare as an option for those seeking insurance. Give consumers a real choice. The public plan would provide both a benchmark for private plans and much needed competition in what are now perversely concentrated markets.


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