More is Less?

Georgia health insurance is no different from any other part of the country. The GAO (Government Accounting Office) says that the small group market is concentrated, with only a few carriers competing for business.

The GAO report analyzed 39 states' health-insurance markets and found that in 34 of the markets, the top 5 insurance carriers accounted for more than 75% of the small-group market, compared with 26 states among 34 analyzed in 2005 and 19 among 34 states in 2002. What's more, the median market share of the largest small-group insurer in each market increased to 47% in 2008, up from 43% in 2005 and 33% in 2002.

The worry, of course, is that more concentration leads to less competition and will only exacerbate price increases for small companies.

So having fewer carriers means less competition and higher prices. Of course some folks are calling for a "single payer" system, which of course is is less than a few carriers.

And there is this.

No doubt when one entity is the dominant or only player prices can become sticky. Of course when the government is the only player they can name their price and play by rules that apply to them and not to anyone else. That is why Medicare reimbursements to providers are below market and Medicaid even lower.

It is also why so many medical providers refuse to accept Medicaid patients and Medicare providers limit the number of patients they are willing to treat.

So this begs the question.

If less competition is bad (according to the GAO) and single payer (as in Medicare, Medicaid) is worse, how will the GAO (or any other government entity) encourage more competition?

Small business owners looking for Georgia health insurance have at least a dozen major carriers and easily double that number when minor players are factored in. If we are to believe the GAO, those carriers operate in a vacuum and there is no incentive nor market forces that prohibit them from overcharging.

If the GAO had a clue (and nothing indicates they do) they would know that the DOI regulates the prices carriers can charge and LIMITS the rate up that can be applied for adverse health conditions. I have several small groups where the monthly claims easily exceed monthly premiums and has done so from the start.

So how will introducing more carriers change this?

It won't.

Many of these clients are getting a 100% return on investment on their premium dollar. For every $100 they pay in premiums they receive $200 in benefit.

Would the GAO have us believe this is bad for the consumer?

Democratic Representative Nydia Velazquez offers this observation.

"Americans across the country know our healthcare system is broken, as millions find themselves on the growing rolls of the uninsured each year, while those with health insurance see costs skyrocket," said Velázquez. "Meanwhile, small firms are grappling with how to pay for rising premiums, while continuing to offer their employees coverage. It has become clear that our current healthcare system is not only morally indefensible, it is also economically unsustainable."

Define broken?

Most of those "millions on the growing rolls of uninsured" are there by choice. Roughly 15 % of the uninsured are "young invincible's" who choose to spend their money on iPhones rather than health insurance. Another 15 - 20% are illegal aliens. About 20% are children, many of whom qualify for taxpayer funded plans such as Medicaid or SCHIP.

But yet our current health care system is "morally indefensible" and "economically unsustainable".

So are trillion dollar deficits . . .

One bright spot in Ms. Velazquez' epistle is this.

Unless the fee cut problem is addressed permanently, many small providers could have no choice but to turn away Medicare beneficiaries.

"Many smaller medical practices are small businesses and are responsible for expenses like rent, payroll, employee health insurance and malpractice insurance," said Velázquez. "Until the Medicare physician fee cut is permanently addressed, smaller providers will face difficulty making long term investments in their practices. Even worse, the projected cuts to Medicare could create a situation where small practices stop admitting Medicare patients."

So government run health care isn't the answer either.

Especially when it is underfunded.

Excuse my skepticism, but I haven't seen evidence that more government is the answer to ANY problem. Individuals and private business cannot continue to operate year after year by spending more than they take in. Eventually even the government will run out of money and will be forced to reduce services, raise taxes, or both.

Seems to me like the cure is worse than the problem.

The USPS is a "quasi-government" entity. Almost every year they raise prices and deliver less service. Fannie Mae and Freddie Mac also operate as quasi-government entities but yet they led us down the road to economic collapse in the mortgage market.

Not very promising, huh?