Increasing competition in health insurance industry

By Congressman Mike Michaud | Mar 06, 2010

Washington, D.C. — For many years, the health insurance industry has benefited from a deal most industries could only dream of — it has been free to collude, fix prices, and divvy up markets. It isn’t surprising that companies have enjoyed record profits.

Unfortunately, there is little that can be done to protect consumers. For 65 years, the health insurance companies have been exempt from federal antitrust laws designed to ensure competition and a free market.

According to a recent study by the American Medical Association, there have been more than 400 mergers among health insurers in the past 14 years. Insurance companies have successfully cornered the market and blocked competition.

As a result, the health insurance markets in 94 percent of the metropolitan areas in our country are designated as “highly concentrated,” according to long-established antitrust standards.

And Maine is certainly no exception to this.

Anthem Blue Cross is trying to raise the costs of its plans by an average of 23 percent. If it goes through, this rate increase would negatively affect thousands of policyholders in Maine and add to the pain of previous rate hikes.

And while premiums skyrocket, the average wage earned by Americans grows at a more modest rate. This leads to an impossible situation for many families and businesses struggling to balance their budgets.

Year after year, more of their income is eaten up by increasing insurance premiums. Many are effectively held hostage by the lack of competition and choice that has helped lead to ever-increasing insurance costs.

Health insurance companies have had a dream deal for years, and it’s long past time for increased competition. Mainers deserve access to affordable health-care coverage, but that is hard to find under the rules of the current insurance marketplace.

Luckily, there is bipartisan consensus on the need to reform the system. And I am pleased to report Congress just took an important step forward.

Feb. 24, by a vote of 406 to 19, the House of Representatives passed the Health Insurance Industry Fair Competition Act, which repeals the blanket antitrust exemption that health insurance companies currently enjoy.

Under the bill, health insurers will no longer be shielded from legal accountability for price fixing, dividing up territories among themselves, sabotaging their competitors in order to gain monopoly power, and other anti-competitive practices.

The bill will also give antitrust enforcers such as the U.S. Department of Justice and the Federal Trade Commission the authority to investigate evidence of collusion within the health insurance industry — a move that puts an end to the 65-year-old prohibition on the federal government’s ability to protect honest competition against bad actors in the health insurance industry.

In the end, the goal of this bill is simple, but very important. It will finally force health insurance companies to compete fairly and adhere to the same laws as other companies.  And Maine could certainly use a healthy dose of competition, since one company currently controls close to 80 percent of our health insurance market. 

While it’s no silver bullet, this bill represents a crucial first step toward bringing down skyrocketing health insurance costs. It will finally ensure proper enforcement and encourage health insurers, through fair competition, to promote increased affordability, improved quality, and greater consumer choice.

I am hopeful the passage of this bill is a sign that more bipartisan agreements can be made on improving our nation’s health-care system.

Democrat Mike Michaud represents the 2nd Congressional District of Maine. He resides in East Millinocket and can be contacted at michaud.house.gov.

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