More competition forces plans, for their fiscal survival, to try to avoid sicker risk pools. As in the individual market, use of underwriting by health plans means smaller businesses whose employees have chronic illnesses may be priced out of the insurance market, or offered deficient plans that fail to protect against financial devastation in the event of serious or chronic illness. Individuals with chronic illness often become unemployable and are pushed into medical bankruptcy, disability, and government plans (Medicaid and Medicare), driving up the cost of these programs.
To cap it off, more competition does not bring the price of health insurance down. There is no correlation between the competitiveness of health insurance markets by state, and the average cost of health insurance by state.6,7
Privatization of Government ProgramsGovernment already pays for over half of U.S. health care from tax revenues.8 Efforts to break up government programs into competing plans have led to higher cost (Medicare Advantage), or much more restricted benefits and provider participation (Medicaid managed care), or senseless administrative complexity (Medicare D), and have not added any actual value to health care delivery.9
Therefore, more competition among plans will not reduce total health care costs, but will push plans to exclude the sick from coverage, reduce benefits, and increase administrative burdens, all of which are destructive to health care.
References
1. Chernew ME, Baiker K, Hsu J. The Specter of Financial Armageddon -- Health Care and Federal Debt in the United States . N Engl J Med 2010;362;13:1166-1168.
2. Foster RS. Estimated Financial Effects of the "Patient Protection and Affordable Care Act," as Amended. Office of the Actuary, Centers for Medicare and Medicaid Services. April 22, 2010.
3. Fisher ES, Bynum JP, Skinner JS. Slowing the Growth of Health Care Costs - Lessons from Regional Variation . N Engl J Med 2009;360;9:849-852.
4. Kuttner R. Market-Based Failure - A Second Opinion on U.S. Health Care Costs . N Eng J Med 2008;358:549-551.
5. Woolhandler S, Campbell T, Himmelstein D. Costs of Health Care Administration in the United States and Canada. N Engl J Med 2003;349:768-75.
6. C. Schoen, J. L. Nicholson, and S. D. Rustgi, Paying the Price: How Health Insurance Premiums Are Eating Up Middle-Class Incomes--State Health Insurance Premium Trends and the Potential of National Reform. The Commonwealth Fund, August 2009.
7. American Medical Association, "Competition in Health Insurance, A Comprehensive Study of US Markets: 2008 Update."
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