Tag Archive: competition

Lack Of Competition Might Hamper Health Exchanges – Kaiser Health News

Health economists predict that in states that already have robust competition among insurance companies—states such as Colorado, Minnesota and Oregon — the exchanges are likely to stimulate more. But according to Linda Blumberg of the Urban Institute, “There are still going to be states with virtual monopolies.” Currently Alabama, Hawaii, Michigan, Delaware, Alaska, North Dakota, South Carolina, Rhode Island, Wyoming and Nebraska all are dominated by a single insurance company. The advent of the exchanges is unlikely to change that, according to Blumberg.

via Lack Of Competition Might Hamper Health Exchanges – Kaiser Health News.

This story needs some additional context.  Section 1334 of the Patient Protection and Affordable Care Act establishes a shared federal-state regulatory regime requiring health benefit exchanges to offer at least two “multi-state plans” (one must be a nonprofit) in their individual and small business exchanges.  These plans would be established under federal charter through the Office of Personnel Management (OPM) and licensed in all states.  The idea behind multi-state plans is to bolster competition in state markets, particularly those with smaller populations and fewer payers, as well as to create a larger risk pool to help assure affordability of premiums and ward off adverse selection.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

U.S. budget constraints could provide additional boost for catastrophic medical coverage

The increased use of catastrophic health insurance coverage could get a boost from the U.S. government’s fiscal woes as it looks to pare down deficit spending including potentially eliminating the tax break employers get for employee health insurance costs.  High deductible catastrophic coverage is increasingly a mainstay among the self-employed in the individual health insurance market and is now moving into employer paid insurance.  It’s already becoming prevalent among smaller employers with 100 or fewer employees.

Catastrophic coverage works similarly to what was known decades ago as “major medical.”  As the name suggests, it covers only high cost care such as hospitalizations and surgeries.  Routine doctor visits are paid out of patients’ pockets.

“The idea isn’t to just raise revenue, economists say, but finally to turn Americans into frugal health care consumers by having them face the full costs of their medical decisions,” an Associated Press story today notes. Health care policy wonks have long observed that as long as people’s medical care is largely paid by others — employers, health care service plans and insurers — there is little incentive for patients to be parsimonious when using medical services.

This logic would work if the market for health services functioned as a truly competitive market.  Inasmuch as there are many sellers and buyers of health services, the market is nominally a competitive one. But it doesn’t behave as a competitive market.  In fact, just the opposite. People tend to remain loyal to their doctors for routine care.  And for emergency or non-routine care, the motive is to get treatment quickly and not shop around for treatment options and prices.

Bottom line, the rise in catastrophic coverage isn’t emerging as a remedy to make the health care market more competitive in the hope doing will will drive down prices and bend the cost curve.  Rather, it reflects the fact that health care costs have reached a tipping point such that it’s no longer feasible to cover most routine services.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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