Article from: Statesman
By Holt Lackey
Most Americans like their doctors, but almost nobody loves their insurance company. Health insurers are a classic “middle person” in the healthcare market. They take money from patients, pay some to doctors and keep the rest. They make more money when they pay doctors less and charge patients more.
Health insurers are more profitable than ever because they exercise what economists call “market power” in ways that edge close to monopoly. As buyers of physicians’ services, insurers can cut the rates paid to doctors. As sellers of services to patients, they can raise our rates and cut benefits.
Unlike almost every other business, federal law allows health insurers to engage in anti-competitive and anti-patient practices, including market allocation, price fixing, and pursuit of monopoly. That’s because since 1945, health insurance has been one of the few businesses exempted from antitrust law. This exemption is known as the McCarran-Ferguson Act.
The results are predictable. Not enough competition. Not enough patient information or choice. There’s not enough healthcare, and it’s too expensive.
According to the American Medical Association, a single insurer controls more than 30 percent of the market in more than 90 percent of metropolitan areas, and more than 50 percent in about half of metropolitan areas. The Kaiser Family Foundation estimates that about a third of people purchasing health insurance through Affordable Care Act exchanges in 2020 only have one or two companies offering policies in their communities. As recently as 2018 more than half of enrollees faced such a monopoly or duopoly.
Lack of competition leaves patients paying more. A study by Hunter College found patients facing a duopoly of health insurers pay premiums 21 percent higher than in areas with more competition, and patients facing a monopoly pay 50 percent more.
On top of monthly premiums, the average American pays more than $1,500 in annual out-of-pocket deductibles. Considering 40 percent of Americans have difficulty affording an unexpected, one-time $400 expense, deductibles impose an enormous additional burden. It’s no surprise medical bills are the leading cause of bankruptcy in the U.S.
Health insurer market power hurts doctors, too. Health insurers try to pressure providers into contracts that, according to Keith Butler, interim CEO of Iraan General Hospital in Pecos County, could damage hospitals “to the point of failure.” Eleven hospitals have closed this year. Hospital mergers are on the rise. This further reduces patient choice.
Meanwhile, health insurers’ profits are higher than ever. United Healthcare recently raised revenue projections after posting $60.3 billion in revenue this quarter, up 9% from last year. The CEOs of the eight largest publicly traded health insurers took home a combined $171.8 million in total compensation in 2016 — enough to cover approximately 60,000 people on the most popular health insurance plan offered on HealthCare.gov that year.
The McCarran-Ferguson exemption has few defenders among antitrust scholars and politicians. I saw this firsthand as a former antitrust policy counsel to Sen. John Cornyn and as chief antitrust counsel to the House Judiciary Committee. In 2010, a bill to repeal the exemption passed 406-19 in the Democrat-controlled House. In 2017, a repeal bill passed the House, 416-7, under Republican control. Both times, health insurance lobbyists skillfully prevented the bill from getting a vote in the Senate.
It’s clear we need a healthcare system that puts patients ahead of insurance company profits. Repealing McCarran-Ferguson is a necessary step. Republican Sen. Steve Daines and Democratic Sen. Patrick Leahy have introduced another repeal bill, the Competitive Health Insurance Reform Act.
There is consensus across the political spectrum that the antitrust exemption is harming patients, doctors and our healthcare system. The only real debate is whether, this time, Congress will do something about it.
Lackey is a civil rights and employment plaintiffs’ lawyer in Austin.