The Health Insurance Monopoly

Strictly speaking, the private health insurance market in the United States does not fall under any of the anti-trust statues that regulate interstate commerce (Sherman Antitrust Act, The Clayton Act, The Federal Trade Commission Act). https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/antitrust-laws

That being said, within their markets, private health insurance companies do indeed act as monopolies. How so?

Which entities set the premiums paid by subscribers for health insurance coverage? Health insurers.

Which entities set the rates of payment for physicians, providers, hospitals and facilities? Health insurers.

Now they will argue that they “negotiate” those fees, yet, in fact, the majority of time, they are negotiating from positions of great leverage.

It is a fact that physicians, providers, hospitals and facilities can refuse to participate with a particular health insurance payer. However, that is really their only leverage. Unless they are an unusually large system with great market reach, their ability to negotiate is quite minimal. The same is true of consumers. Other than the very largest employers, very few small employers and almost no individuals have any ability to negotiate premium rates with health insurance interests.

Currently, the private health insurance market is predominately regulated by individual state insurance commissioners. There are very few instances indeed where a state insurance commissioner has made any major effort to control premium costs or intervene on behalf of fair negotiations between providers and insurers. https://www.naic.org/state_web_map.htm

All of these facts are make up part of the reasons for resistance by private health insurers to an open national market. The fragmentation of regulation of the health insurance market has been only mildly assisted by the Affordable Care Act. The current revision plan proposed by the administration and congress will not solve the problem.

Medicare and Medicaid also suffer from similar problems in that third party administrators contracted by state and federal agencies administer them. Again, Medicare and Medicaid set payment rates without negotiation. Providers have the option to refuse participation, as with private carriers, but once again, that is of little effect in reality as most providers, facilities and networks cannot survive without these funds.

The only hope of retaining a semblance of a free market for health insurance is with regulation that controls premium rate increases in the same manner as utility companies are nationwide today. The natural progression of the current trajectory will be “Medicare for all” with a private secondary market for the 10-20% that can afford that kind of coverage. I do not think in the long run this is the best outcome, however, it may well come to pass.

Also, and I do not necessarily think this a bad development, the progression of concierge medicine will continue. This trend is going to increase and of course, will benefit those at the higher end of the economic spectrum. Lastly, it is most likely that the advance of health related technologies will outpace any political response by either party and change the system right underneath the noses of politicians. See: https://www.angelMD.co