Det danske Fredsakademi
Kronologi over fredssagen og international politik 16 januar 2010 / Time Line January 16, 2010
Version 3.515. Januar 2010, 17. Januar 2010
01/16/2010
Monopolies Control Health Insurance
By Don Monkerud
Like pathetic knights of another era jousting at windmills,
industry shrills attack health care reform, claiming it "tramples
individual liberty" and stifles "free enterprise."
Far from protecting individual liberty or promoting free
enterprise, these forces uphold monopoly control of health care
insurance that has a stranglehold on American consumers. And they
pay huge sums to control the debate and twist legislation to their
advantage.
Since 1998, over 400 mergers left two conglomerates in control of
the huge health care insurance industry. Mergers allowed insurers
to raise prices, buy influence in Congress, and redistribute cost
savings to shareholders. Consolidation increased rapidly. Between
2004 and 2005, 28 health care mergers, valued at $53 billion,
outpaced the number of health care mergers in the previous eight
years combined.
Low interest rates, leverage and lax anti-trust enforcement by the
Bush Administration allowed conglomerates to take control of the
health insurance in the U.S. A 2009 report from Fortune Magazine
reveals that the revenue of the top two companies account for $142
billion or 36 percent of the health care insurance market, while
the top four gross $202 billion, almost three quarters of all
health insurance.
"During the Bush administration, there were no enforcement actions
against health insurers' anticompetitive, deceptive or fraudulent
conduct," David Balto, senior fellow, Center for American Progress,
told the Senate Committee on Commerce, Science and Transportation
in July 2009. "There was tremendous consolidation in the market,
and the Justice Department simply required minor restructuring of
two mergers. There were no cases against anticompetitive conduct by
health insurers."
Health insurance monopolies do business under pseudonyms to hide
their identities and project a false impression of competition in
the industry. The largest, UnitedHealth Group, reported $81 billion
in revenue in 2008 and sold products under such names as
OptumHealth, Ovations and AmeriChoice. WellPoint, the second
largest, has revenues of $61 billion and insures 35 million people
under Unicare and Blue Cross/Blue Shield. Concentration is even
greater on a state-by-state basis.
A 2006 study by the AMA found that health insurance is "highly
concentrated" in 94 percent of the states, and in a majority of the
nation's largest metropolitan areas a single insurer controlled
more than half the business. A 2007 study by Health Care for
America Now found that in 38 states, the top two insurers control
57 percent or more of the market, and in 15 states one insurer
controlled 60 percent or more of the market.
Facing the monopoly power of UnitedHealth Group and Wellpoint,
smaller firms cannot compete: Aetna ranks third with $31 billion in
revenue, and Humana is fourth with $29 billion. Of the 14 health
care insurers, the smallest eight have yearly revenue of less than
$12 billion.
Such concentration stands in stark contrast to a "free enterprise"
system where companies compete to lower costs and provide consumer
choices. Instead, monopoly control raises prices unilaterally and
controls every aspect of clients' health care. No wonder insurance
premiums increased an average of 87 percent in the past six years,
according to FamiliesUSA.
Economists point out that most wage increases went to pay for
health insurance from 2000 to 2009. For example: In New York, the
cost of health insurance increased 93 percent, while wages
increased 14 percent; in California, health insurance increased 109
percent, while wages increased 26 percent; and in Texas, health
insurance rose 80 percent, while wages rose 11 percent. Insurers
also have "monopsony" power to dictate prices and coverage terms to
hospitals and doctors, with profits redistributed to shareholders.
Profits increased apace.
According to SEC filings, the major health insurers increased their
profits over 400 percent from 2000 to 2008. Overall, profits rose
from $2.4 billion in 2000 to $13 billion in 2007. CEOs were paid
accordingly; their pay reaching 468 times that of the average
American worker, with money left over to lobby against reforms.
According to the National Institute on Money in State Politics, the
health care industry paid almost $400 million to politicans in
state governments in the past six years. The Center for Responsible
Politics discovered the industry spent over $1 billion in the past
two years to oppose real reform. As the debate progressed,
important consumer protection provisions were whittled away.
"Although the overwhelming majority of the American people support
it, there's no public option, no end of the anti-trust exemption
for the health insurance industry, no option for people over 55 to
buy into Medicare, no ability of the government to negotiate drug
prices or import cheaper drugs from Canada, and no real regulation
of health insurance premiums," said Zack Kaldveer, spokesman for
the Consumer Federation of California. "Yet, Congress is mandating
everyone to purchase an overpriced product from a corrupt system.
If premiums continue to rise, we'll be stuck wasting money on an
unsustainable health care system."
The insurance monopoly is pouring millions of dollars into creating
misleading catchwords, carefully chosen to guide our opinions.
Reforms are needed to protect consumers from a vast monopoly,
slowly draining our paychecks into for-profit conglomerates.
Without strict controls over these monopolies, we will be stuck
with the same old predatory system.
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