U.S. Healthcare: Anti-Competitive Monopolies?

There has been some criticism of US Health and Human Services Secretary Kathleen Sebelius’ remarks regarding the notion of a private insurance monopoly in the U.S.:

“We want to make this work. We understand the status quo is unacceptable. We understand we have to do something this year. And we also understand that an insurance monopoly with only private companies doesn’t hold down costs.”

See her on NewsHour:

Before I share links of examples of monopolistic behaviors amongst healthcare companies and the lawsuits that are a result of these monopolies, I want to add that the market has had decades to increase competition and differentiate on quality of care, services offered, cost and any number of features. That the private industry cannot and will not cover everybody is a market failure to provide a basic human right: access to healthcare for every citizen.

I found this 109 page PDF on the Healthcare for America Now website. Of note:

“If they chose to, private insurers could use their market power to drive hard bargains and lower costs, but instead they have passed along these costs through higher premiums to enrollees and employers.”

and:

090625-us-healthcare-ins-mkts

This page shows U.S. Insurance Market Concentration by State using 2007 data. (Here’s a more legible PDF)

The most populous states have better insurance “options”, but one still has to qualify to be insured and the premiums in New York and California are about what most people in the U.S. pay on their mortgage.

Links about lawsuits & settlements
From 2006 NYTimes: Doctors’ Group Sues Two Insurers, Charging Unfair Coercion

From 2006 medicalnewstoday.com: Lawsuit Claims Several Health Care Systems Conspired To Fix Pay For Nurses

From 2007 NYTimes: Hospital Sues Insurer, Charging Conspiracy

From early 2009 Reuters: UnitedHealth settles payment suits for $350 million

From 2006 FierceHealthcare.com: HealthOne fights UnitedHealth suit (This is awesome! UnitedHealth claimed that HCA was using anti-competitive practices! HCA fought back.)

From today’s Wall Street Journal: Big Health Firms Underpay Claims

In all of these links, the behavior of the insurance companies are anti-competitive and indicative of what happens when monopolies exist.

The longer I research and write about healthcare reform, the harder I’m leaning toward scrapping the health insurance industry and advocating a single payer system. The stories and behaviors of private companies are horrifying. I can be a realist sometimes. We are not in a climate where single payer is going to happen. However, I believe we are in a climate where a public option is a must. No real change is going to happen unless there is an option for everybody to be covered. Private industry will not do it. It’s time for the government to step in.

  • nobody

    As noted in comments previously, HCFAN shows bias. If you’re trying to learn something or convince people who don’t already agree with you, they don’t seem like the place to go.

    Even with that bias, they show real competition in populous states. New York’s biggest player has 26% of the market. If “lack of competition” were the problem, we would expect New York’s health insurance system to work great, right? But I don’t see any public option advocates pointing to New York as a model.

    The talk of competition is transparent baloney. Wouldn’t it be better to discuss the real motivations, rather twist words like “monopoly” to make this seem like something else?

    • http://blurbomat.com/wordpress blurb

      I said as much above:

      “The most populous states have better insurance “options”, but one still has to qualify to be insured and the premiums in New York and California are about what most people in the U.S. pay on their mortgage.”

      So everybody should move to California, New York or Florida? Monopolies do exist as do monopolistic behaviors. You’ll note that one still has to qualify for health insurance. The insurance industries can and will do everything in their power to deny you care. That is how you define “real competition”? This behavior is what monopolies do; they call the shots and everybody else is screwed. Your claim that this is “real competition” is laughable.

      I’ve said to you before, I know I’m not going to change your mind.

      You seem to be that guy in the room. Stand tall. Stand proud. NEVER BEND. :-)

      The insurance system in the U.S. is broken. Whether you agree with anything I’ve shown or said here doesn’t change this fact. You appear to be in the minority when it comes to wanting to see a public option in the reforms in front of Congress. So be it. We disagree and always will.

      Finally, I’m not sure I’ll be responding to anything you write any longer, as you seem to be perfectly fine to be that guy in the room who never offers a counter suggestion, contributes to the conversation or even works to understand those whose opinions differ. I’ve countered your critiques and comments with concrete evidence to the contrary. That HCFAN site shows bias because they want a public option. But the DATA THEY USE is from the AMA. If you can’t see through to that point, I’m not sure you should stay here and leave your silly comments.

      • nobody

        Hmm, I could make similar comments about your responses. You’ve invited this discussion. I can go back to tossing in mummy pictures from the peanut gallery.

        Here, you miss the point of the comment. The argument is that a lack of “competition” leaves insurers without an incentive to improve cost or quality. So we would expect that incentive where they do have competition, and would expect lower costs and better quality in, say, New York, because there is insurer competition. Unfortunately the experience there seems similar to other markets, so it doesn’t seem that competition is actually the problem.

        Nor does the qualification problem for some mean there isn’t a market for others. I doubt there are many mechanics for Ferraris in Alaska. Does that mean there is no market for auto repair in the state?

        You want coverage without qualification, and you seem to want progressive subsidies for health care, and so you want a public option that will provide these things. That’s fine, but arguing that option will also be better on the other dimensions is probably a mistake.

        Look at it this way. You want a system that optimizes the cost/quality balance, provides unqualified coverage and progressive subsidy. I just want one that optimizes cost/quality; I figure the coverage and progressivity problem will be handled outside the system. It stands to reason that I’ll design a cheaper, higher quality system than you, because I’m trying to do fewer things. You’ve added complexity in your goals, and that hurts the system’s performance on the goals we share.

        There isn’t anything wrong with your goals. But you are claiming the public option dominates others on all dimensions. Such solutions are quite rare. By insisting your preference is more efficient than less ambitious alternatives, you are stepping right into the wheelhouse of green eyeshade types like myself.

        • http://blurbomat.com/wordpress blurb

          I don’t think you can say the same thing about me. I’ve linked to tons of sources illustrating my points.

          You’ve missed my point entirely. What I’m saying is that the “free market” and “competition” does not exist in the U.S. Even if I’m an employer looking for plans, I have limited choice and virtually none of the characteristics that a true free market would enable in choosing healthcare. I think I’ve made that point strongly enough to back up my next point which is that the system is broken; so broken that major reform is necessary. When markets go corrupt, the government must step in. I don’t care what it costs. We must have a will to provide for our citizenry. The public option does dominate on all dimensions. Every other major industrialized nation has a public option. The U.S. is behind. We no longer lead.

          Prove me wrong. I want links, reports, facts. I did welcome this discussion. Discuss. Prove me wrong. Not with your opinion. With facts. Just saying “You’re wrong.” repeatedly doesn’t really advance an alternative. I’ve shown you where i think you are wrong by providing to you exactly what I’m asking from you.

          I think we agree that just having a public option is not a cure-all. Behaviors will have to change. Better diet, more exercise, etc. It appears we agree in that regard.

          • nobody

            “Even if I’m an employer looking for plans, I have limited choice and virtually none of the characteristics that a true free market would enable in choosing healthcare.”

            Maybe in Utah. Not in New York, where your table puts the largest player at 26% share and the largest two at 47%. Unless you think New York’s figures also show anticompetitive consolidation, but I don’t think that’s a plausible conclusion.

            NY might be actually uncompetitive, but if so it’s on different evidence than the consolidation figures provided here.

            I don’t know what other characteristics you use to idenfity a free market.

            • http://blurbomat.com/wordpress blurb

              You are still refusing to see my point:

              Presuming you are correct about New York, that it really is competitive, I have to move to hope for a competitive market. And even then, it’s the most expensive market in every way (housing, business costs, cost of living just to hope for a competitive chance at healthcare, which I already know I’ll be denied for.

              You haven’t provided one single response to my prior comment.

            • nobody

              You are saying that many places in the country lack competition, and thus we need a public option to improve the system.

              I’ve accepted that statement, for the sake of argument, as your own figures don’t support your statement. Even if I accept your definition of competition (ie, these insurer consolidation figures) New York has competition and still seems to have all the problems. Therefore the problem seems to something other than competition, as you’ve defined it, and the “public option” would not address the problem by adding competition.

  • HDC

    I think the industry needs to change it’s mindset and it’s definition. The insurance companies are just that – insurance. Health is not something that fits the definition of what an insurance company is about and how they do business and turn a profit. People are going to get sick, shit happens. It’s a certainty that people will have something go wrong. And insurance companies function on if, not when. The two just do not fit.

  • jamarkham

    one still has to qualify to be insured

    I’ve never been asked to do anything to “qualify” for insurance except pay the premium- the university when I went to school, or to my employer when I got a job.

    I understand that many people don’t have employer-offered insurance, but many do. This seriously distorts the insurance market. I’d like to see all medical insurance privately purchased, so we all have the same costs & worries.

    • http://blurbomat.com/wordpress blurb

      That’s the distortion of employer-centric healthcare. You are joining a group. You needn’t qualify. But if I want to start my own business, I have to either create a group or buy my own coverage. In either situation, the costs are high, the options few and in the case of buying my own coverage, I have to go through an interview where my health history is assessed. If I’m honest, I’ll answer that I have seasonal allergies. And the insurance company will say that they won’t cover me because of said seasonal allergies. This happened to me in 2005. Every year I call the insurance company, and every year they tell me the same thing.

      Most people who work for other people never have to deal with this aspect of healthcare. They should. The employer-centric healthcare shields the dark side of the industry from people. It also shields the costs. Whatever you pay out of pocket, your employer pays 3x or more.

      • nobody

        We went into individual insurance from employer provided group. We had to provide a certification that we were previously covered, I think within the prior 30 days. It’s my understanding that with that certification, we could not be denied coverage, for anything, but I could be wrong.

        Such regulation seems like a reasonable way to handle the moral hazard problem of qualification. People can’t enter the system the moment their costs seem likely to rise over the premiums, but once they’re in the system they can’t be kicked out. COBRA is another, for those leaving group coverage, though it’s famously expensive and not permanent.

        I imagine the reg/law is federal, and it’s possible that it was put in place after 2005. It’s also possible the insurer didn’t have a duty to disclose the option to you.

  • http://gfmorris.net/ Geof F. Morris

    Jon:

    I often use education as a comparison point to healthcare. Consider higher education, which is seeing costs skyrocket—most schools go up at least 10% on tuition every year right now. No one really looks at *why* this is happening, and it’s a situation where the public and private sectors are in competition. Imagine what higher education would be like in America without public competition!

  • http://emailtoid.net/i/1a942079/f4b7a1d6/ emailtoid.net/i/1a942079/…

    I think it is important to note that both Medicare and Medicaid contract with managed healthcare organizations/corporations.

    http://health.utah.gov/medicaid/provhtml/managed_care.htm

  • http://emailtoid.net/i/1a942079/f4b7a1d6/ emailtoid.net/i/1a942079/…

    Here is an interesting (albeit aggravating due to the spongebob sound effects) interview from a doctor about healthcare reform and specific responses to Obama’s Green Bay Town Hall Speech.

    I hope that you will listen to all of it. Oh, and the host is Australian-accented, so I guess he’s okay too…or nice to listen to. :-)

    http://www.solidprinciples.com/blog/?p=144

  • http://nelking.myopenid.com/ nelking.myopenid.com/

    Interesting column from business week.

    http://bit.ly/LDmxZ

    My husband and just attempted to save some money looking at individual policies (two different insurers) and we are currently covered through a group plan. I can’t change the level of our coverage mid stream.

    I have had the same experience Jon, the front line screening is focused on screening out for individual policies.

    On top of that, top executives of the country’s largest insurers when asked by a house sub committee whether they would stop the practice of rescission except in case of fraud, they said no.

    http://bit.ly/J3jzy

    There will always be a population of people who will be refused coverage, people who like me, are pretty healthy but have been denied because of telling the truth on paper.

    This is why insurance should not be tied to an employer and either insurers should stop the practice of screening people out or get used to the idea of a public option.

    nobody, I’ll look into the rules, but I don’t think there is anything state or federal stopping an insurer from denying you for an individual policy. Otherwise, I’d have different insurance right now.

  • Jane

    To flip to the other side of the coin, I have United Health Group coverage, which in the state I live was the 2nd place “Monopolist”. I hope it never changes. They are really great, nice service. I had a massive knee surgery in February. They paid all of those bills (I had 100% covereage) within two weeks of receiving claims.

    Yes my insurance is paid through my employer but my salary is a little lower to have such good benefits. I don’t mind.

  • http://nelking.myopenid.com/ nelking.myopenid.com/

    So I’ve learned that a few states allow for a group of one. Meaning you can get guaranteed individual coverage.

    This little decision alone would make part of the issue better and I’m sure in those states that mandate it, there are other issues.

    http://www.statehealthfacts.org/comparetable.jsp?cat=7&ind=350

  • http://larrywright.myopenid.com/ Larry Wright

    I’m sure that there are some real horror stories about things that insurance companies have done to people. I would also bet that in every country that has government run healthcare you could find similar stories. I emailed you with the story about what the Veteran’s Administration did to my dad – that’s what government-administered health care is like.

    It’s possible that I am atypical here, but my experience with health insurance companies has been very positive. I’ve had three providers: John Deere, OSF, and currently Blue Cross of Illinois. That insurance has been with us through three pregnancies and countless doctors visits for colds, well child care, skin conditions, ear infections, and even a couple of E.R. visits. They even cover chiropractic care. Through all of this I’ve never had a denied claim or a bureaucratic hassle to deal with.

    On the subject of costs, one of the problems with the current system is that people have no responsibility for helping to manage costs. If you have a $10 co-pay for prescriptions, regardless of how much the pharmacy bills, then you have no incentive to shop around (which you would certainly do if you paid it out of pocket). The same goes for other types of care, doctors visits included. If people had an easy way to compare the costs of their providers, and incentive to pay attention to them, we could reduce the cost of healthcare across the board.

    Final comment on health care… I’m a fan of HSAs and high-deductable plans. My employer (a small-ish company in the Midwest) is prepared to offer one soon and I will take advantage of it. I think it’s the right choice for a lot of people.

    • http://blurbomat.com/wordpress blurb

      I agree about personal responsibility. It leads to smarter living and making the right calls about ones health.

      VA healthcare is an atrocity. The horror stories abound. Shameful.

      As long as I’ve been in a group, I’ve had pretty good experiences with healthcare companies, with the exception of specialist waits. I’ve had to wait 8 weeks to see a dermatologist who specializes in skin cancer. Will seem him next week. Waits to see specialists will likely always be a part of the system. I just hope that someone who needed the visit more than I do got in in time.

      I would argue that those getting squeezed in the current healthcare setup are: poor people, small & large businesses (GM, who spends more on healthcare than they do parts to make cars) and those with illnesses that can’t get into a group plan.

      • http://larrywright.myopenid.com/ Larry Wright

        So if you agree that the current government-run healthcare is atrocious, why do you believe that a universal government-run system is going to be any better?

        I think the problem with specialists is really a supply/demand issue. I don’t know that anything can solve it, short of making it more attractive to the next generation of doctors to go into those specialties.

        • http://blurbomat.com/wordpress blurb

          There are a couple of reasons that VA care is atrocious:

          1) unexpected and overwhelming influx of injuries from the Iraq & Afghanistan wars.

          2) Under funding.

          I believe that if we had the mentality of a single payer system, we wouldn’t need the VA. We’d also be assured a higher quality of care, because everybody would be able to pick any doctor they chose.

          What if we took a hard look at specialties and paid special incentives to encourage their study and practice?

          I really believe that having an employer-based healthcare has damaged how we think about healthcare in the U.S; not just because it hides the costs from consumers, not just because it burdens companies whose primary function is not healthcare to provide it but because we have allowed ourselves to think what we currently have is the best possible system and all other systems are totalitarian, communist, socialist or whatever words will conjure the worst images.

          I’ll have one final post where I state my case concisely (hopefully).

          • http://larrywright.myopenid.com/ Larry Wright

            I may be missing something, but in what way does having government-provided health care make the cost to the consumer more obvious. It seems like that would actually make the problem worse.

            Regarding reason #2: I don’t think that had anything to do with my dad’s situation. It seemed from my vantage point to be bureaucracy and general government incompetence, something I can’t fathom would get better if they had responsibility for all health care.

            As for specialties, I believe they do make proportionally more income (neurosurgeons, proctologists, etc), but they also tend to have significantly higher malpractice insurance payments due to the riskier nature of what they do.

      • http://emailtoid.net/i/1a942079/f4b7a1d6/ emailtoid.net/i/1a942079/…

        “I’ve had to wait 8 weeks to see a dermatologist who specializes in skin cancer. Will seem him next week. Waits to see specialists will likely always be a part of the system. I just hope that someone who needed the visit more than I do got in in time.”

        Okay, color me confused. I worked for a derm group for 4 years. They specialize in, well, skin and skin cancer. Do you need MOHS?

        Does this “specialist” take Medicaid? Because, not all “specialists” are required to take Medicaid even if they take Medicare. Ask them. I dare you.

        I really, also, cannot fathom this thought process. So, you are willing to forfeit your potential skin cancer for a couple of zits? Some actinic/seborrheic keratoses, some atypical moles? Melanoma does not play and is a very deadly cancer.

        Whatever. I’m pretty much done here. It’s very apparent that you have no idea about the in’s and out’s of this wonderful (for now) healthcare system that we do have. All you see is “Access for everyone!! WOOT!”

        It’s just not that simple. And you can certainly forget about sub-specialty care like skin-cancer dermatologists once you get what you want. It’s NPs and PAs all of the way until you or one of your family members ends up in the hospital dying. I have worked in this business for 20+ years. I would never pretend to know how to operate a website or even make a solvent business out of it, yet many people feel they “know” how the back engines of healthcare work. NPR and PBS don’t even begin to touch on it.

        The ole’ rhetoric of fear-mongering is going to be very apparent at this point, so I’m done. Stick a fork in me.

        Peace

        • http://blurbomat.com/wordpress blurb

          The specialist I was referred to works in a clinic that does MOHS. I don’t know what the moles I need checked may be, but this specialist came highly recommended. It’s not the first time I’ve had to wait for a specialist and I’m sure it won’t be the last.

          The only fear mongering in the debate that I have seen, heard & read is from people who don’t want a public plan.

          I’m trying to make a case, but my baby comes first. I had hoped to have about a half dozen more posts, not about fear mongering, but more figures and facts. However, diaper duty and strange sleep schedules have taken precedence.

          I’m not sure what the rest of your comment was about except to belittle me? Not clear. Thanks for taking the time to call me ignorant.

          Also how done are you? Medium? Well?

        • nobody

          Maybe you know dermatology, but you don’t know this case, so I don’t see how you can infer anything about blurb’s thinking from his decisions in it.

  • xkikix

    I first wanted to say that for my last comment, I got a reply saying [roughly] “I can’t conjure any sympathy about your current financial state because you’re married to a doctor and you will always have an income.” Just wanted to clarify that I never wanted any sympathy — I’m just worried about it now.

    I totally agree that there needs to be a public option. But how they’re going to do it is the problem. Doctors can always practice at places that pay more because they don’t accept public insurance like Medical. There’s a good probability that quality of care will decline for public option clinics [although perhaps lesser quality is better than nothing].

    Also, there’s an idea out there to base doctors’ salaries on “grades” so to speak, success rates for surgeons and such. In this case, there’s no incentive for doctors to perform a hip replacement on an 80 year old granny versus an injured but otherwise healthy 35 year old.

    And so, I’m back to where I started — lots of problems and no solution — everywhere I turn, there’s a “Even if we solve this, then what about THIS?”. Whatever happens is going to wind up being the lesser of evils, I think.

    • xkikix

      Oh, btw the reply wasn’t from you, Jon!

  • Lynn

    Jon,

    Hi maybe you can help. I get in debates with high school friends on Facebook. They are all pretty much against Universal Health Care. I am just got good at debating them for example. Todd wrote this:

    “That’s why we are the greatest country in the world, because you have a CHOICE.

    Who is going to pay for this healthcare? Again, I will have to pay for me and my family and then again for someone elses family. I do not care to pay for someone elses healthcare. I have my only family to take care of and it is becoming quite impossible to do when… Read More I have to support everyone elses.

    France funds their healthcare through payroll and income taxes. So, how much more a pay am I going to lose. I already drop 40% of my pay every two weeks to the government.”

    So many people are making statements along the lines of…why should i pay for someone elses insurance..it is their own fault that they do not have coverage.

    How would you respond to that? I try to get them to watch Sicko but they will not. They are convinced that the entire movie is a bunch of lies.

    Help!

    Thanks!

    marie lynn moore

    • nobody

      Thinking through your own answer to the question would be a useful exercise.

      Your opinions are important. Your repetition of other people’s is not.

    • http://blurbomat.com/wordpress blurb

      Well, I had hoped to give you more ammo, but Marlo was born and my time to blog has been severely limited.

      I’d avoid facebook arguments. I’ve jumped in to give my more conservative friends shit and their extended networks jump in and it gets ugly fast. Better to do your research and formulate your opinion based on your research.

      In my case, I think that most people fear a public healthcare option because of Reagan. Out of one side of his mouth, the government was “in the way”. Out of the other side was a need to deficit spend. He didn’t shrink the size of government, but he did plant a massive blanket of seeds that the government is the “bad guy”.

      Most conservatives will end up at Reagan. Some won’t. But most do, in my experience.

      To me the biggest issues facing the U.S. are cost reduction, availability and portability and providing a public option for healthcare so that everybody is covered.

      That’s me in a nutshell. I don’t expect you to agree, but I’ve tried to share links that support (and in some cases challenge) my views.

    • http://libelletage.blogspot.com/ libelletage.blogspot.com/

      Yay! Universal Healthcare, my favorite topic. First of all the term universal healthcare vs single payer vs public option all have different meanings. Marie, when you talk about another country and what they pay in taxes that is not what they pay for heathcare. The world health organization has the data on what each country is spending on health care (listed in % of their gross domestic product). And the U.S. is spending the most by far ay %16.9. All of the industrialized countries are spending less. And we rank below many of them in life expectancy and other health indicators.

      If you can look up HR 676, a proposed legislation for single payer (meaning one payer-government) it breaks down the cost to the public and businesses. It is NOT 40% taxes.

      And Marie, if your nieghbor has no health insurance, and has high blood pressure that goes untreated for 20 years until they develop kidney failure, you will be paying a lot more to take care of them. Lack of insurance also causes increased ER visits by unisured. People who can’t afford health insurance can’t afford the expensive ER visits and the cost will end up in our pocket.

      And one more point, having the government collect the money and pay providers does NOT mean they have to run healthcare completely. Hospitals can remain private and given an annual budget. Every industrialized country does things differently in Europe. We can study what works and what doesn’t.

      My husband and I ust always maintain employer coverage because my husband has pre-existing conditions that exclude him from private insurance. And we are both nurses. We work hard to care for people when they are sick and yet we can’t even get guaranteed coverage.

  • epoh

    In my opinion, a far better indicator for health care costs by state is tort reform. States that have passed various tort reform related to medical malpractice have lower health care costs. Period.

    I have no objection to a Federal healthcare program run alongside private health insurance, like they do in Australia. The problem is that our gov’t has not yet shown us they know how to run ANYTHING properly and on a budget.