Health Insurance and Free-Market Competition
US News & World Report published an article that is relevant to the issue of health reform in the 2008 election. The author, Bernadine Healy M.D., writes about the reasons for denial of care by insurers, along with inconsistencies in the reasons for denial of care. This article has immense relevance to any discussion of health systems. At the heart of it, insurance companies are profit-driven organizations (and there’s nothing wrong with that…if they were unprofitable, a lot of people would be unemployed). Over the long-run, the free-market has shown to be a highly-effective system. A liberatarian view would be that unscrupulous insurers would face decreased demand for their coverage, with potential members going elsewhere to find better insurance options. Assuming there was sufficient visibility on the unfriendly reimbursement methods at Insurer A, then demand will naturally flow to Insurer B. This is a theoretically sound argument.
However, relying on free-market competition will no doubt lead to temporary inefficiencies. If you are already insured by Insurer A, you are in effect stuck where you are. You already have a pre-existing condition, and you’ll find it almost impossible to be covered by Insurer B for your current affliction. So as a consumer, you’re left with no choices. It isn’t much of a free-market for you as a consumer, and increased competition isn’t going to help you in your circumstance.
U.S. News & World Report: How Crafty Health Insurers are Denying Care
Some food for thought. Feel free to comment and discuss.
For HealthCare.com’s analysis of the Obama and McCain health care proposals, visit HealthDecision ‘08 at http://decision.healthcare.com/obama-mccain/.
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