New Report: Private Insurance Mergers Lead to Near-Monopolies Across the Country

Below was taken from The Website Health Care for American NOW -
I feel this information is so important it should be posted everywhere. We need to be informed and involved in order to effect a change.

Sen. Schumer and Health Care for America Now Warn of Private Insurers’ Monopolies; Former US Antitrust Official Calls for Investigation


Washington, DC – Senator Charles Schumer (D-NY) joined Health Care for America Now (HCAN) – the nation’s largest health care campaign – in releasing a new report today that shows extreme health insurance industry consolidation has resulted in a market failure where a small number of large companies use their concentrated power to control premium levels, benefit packages, and provider payments in the markets they dominate. As a result, health insurance premiums have skyrocketed, going up more than 87% - on average - over the past six years.

“This is the starkest evidence yet that the private health care insurance market is in bad need of some healthy competition,” Senator Schumer said. “A public health insurance option is critical to ensure the greatest amount of choice possible for consumers. We believe that it is fully possible to create a public health insurance plan that delivers all the benefits of increased competition without relying on unfair, built-in advantages. If a level playing field exists, then private insurers will have to compete based on quality of care and pricing, instead of just competing for the healthiest consumers.”

After reviewing the report entitled “Premiums Soaring in Consolidated Health Insurance Market,” David Balto, former Policy Director of the Federal Trade Commission and now a Senior Fellow at the Center for American Progress, sent a letter -co-signed by HCAN - to the Department of Justice Antitrust Division asking for a comprehensive investigation into the health insurance marketplace.

"The HCAN report provides a much needed spotlight on health insurance markets, and what it found is a toxic marketplace where competition and consumers suffer,” said Balto. “Unfortunately, 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."

In the past 13 years, more than 400 corporate mergers have involved health insurers, and a small number of companies now dominate local markets but haven’t delivered on promises of increased efficiency. According to the American Medical Association, 94 percent of 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. Profits at 10 of the country’s largest publicly traded health insurance companies rose 428 percent from 2000 to 2007. In 2007 alone, 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. Moreover, the health insurance industry invests more in buying back its own stock and rewarding its shareholders than in improving system operations, reducing premiums, or in developing ways to pay doctors and hospitals fairly.

"To try to reform healthcare in the current market structure is like setting sail across the Atlantic on a raft," Balto added. He noted while renewed antitrust and consumer protection enforcement is essential, it is not sufficient to begin to restore some semblance of a functioning market. Only a public health insurance option will be able to force private insurance companies to adopt new pro-consumer policies.

“Talk about an unfair advantage,” said Richard Kirsch, National Campaign Manager, Health Care for America Now. “There is nothing more unfair than the way the current monopolistic private health insurance market controls both cost and coverage. The Antitrust Division of the Department of Justice should take a long, hard look at the way this industry operates. It needs rules. It needs regulation. And most importantly, it needs real competition from a public health insurance option.”

“It will be extremely difficult to return competition to the farm after the barn door has been left open,” Balto explained. “Insurance companies will fight tooth and nail against any antitrust or consumer protection enforcement, and they have the monopoly profits to fund a One Hundred Years War of litigation.”

Contact Jacki Schechner for call information at jschechner@healthcareforamericanow.org or 202-454-6196. For more information about Sen. Schumer call Brian Fallon 202-224-8346.

PLEASE Note:

This report makes use of data published by the American Medical Association, which is not a member of the Health Care for America Now coalition and did not collaborate with HCAN on the writing or research presented here.

The AMA data presented in this report included figures for both statewide areas and metropolitan statistical areas. All data for self-insured employer-sponsored plans refer to preferred provider organizations (PPOs), not combined data for health maintenance organizations (HMOs) and PPOs.

HCAN attributed the following statement to the AMA in individual state reports: “The American Medical Association reports that the number of health insurance companies has declined by nearly 20 percent since 2000, and as a result 94 percent of insurance markets in the United States are now highly concentrated.”

This sentence should have the following footnoted citations:

David Balto, “The Right Prescription? Consolidation in The Pennsylvania Health Insurance Industry,” Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights, July 31, 2008. Accessed at http://www.americanprogressaction.org/issues/2008/balto_testimony.html;

American Medical Association, “Competition in health insurance: A comprehensive study of U.S. Markets: 2008 update.”

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