• Kaiser Health News Opinion Column

    Ian and I have a co-authored Kaiser Health News opinion column out today. We argue that repealing insurers’ antitrust exemption won’t change things much and isn’t likely to help consumers significantly. Further, a focus on competition in insurance markets has the potential to distract policymakers and the public from the principal source of increases in premiums: concentration in the provider market.

    Here’s the opening paragraph:

    It is well known that concentration in the health insurance industry is to blame for rapidly rising premiums. Well known, but wrong. Taking political advantage of this common misconception, last week the House passed a bill to repeal insurers’ antitrust exemption. But even if that bill becomes law it won’t do much good, and politicians’ distraction could actually harm consumers. It’s far more likely that premium increases are largely due to other factors.

    Kinda makes you want to read the whole thing, right?

    • It would, but I think I already know what you’re going to say…. 😉 I am amazed when people don’t get that attacking the insurance companies on these questions really is a classic case of rearranging the deck chairs on the Titanic. I’ll try to read it later though.

    • “Therefore, diluting the insurance market may have small downward effects on insurer profit and administrative costs, but it could have large upward effects on prices of health care services”

      Wouldn’t market consolidation, as opposed to dilution, lower administrative costs to the business model of insurers?


      • @Brad F – I see your point, and yes I agree with you. But others have the notion that greater competition produces efficiency (you know, hungry companies do it better, faster, cheaper). In the case of insurers, that’s dubious (economies of scale, scope, and all that). One can view the sentence you quoted as giving maximal credit to the argument for increased competition. For all that, it won’t do much good.

    • Great column. It’s too bad that our legislators are more interested in optics than good policy.

    • I’m very glad to sse this article: I came to very similar conclusions in a recent article titled “Pointles But Popular: Subjecting Health Insurers to Federal Antitrust Laws Would Avoid, Not Achieve, Reform” (http://tinyurl.com/yhqj9po).

    • @John – Austin and I have been blogging on both the legal and economic angles of this issue for a while. You may find some of our past posts interesting (search on mccarran, repeal, exemption – we haven’t been consistent in tagging). While it seems like we may disagree with you on the underlying merits of the current HCR proposal, we at least concur that McCarran repeal is a sideshow at best.