The Health Insurance Monopoly

By: Dale J. Buchberger, PT, DC, CSCS, DACBSP

Merriam-Webster defines monopoly as “complete control of the entire supply of goods or of a service in a certain area or market”. If we apply this definition to our current healthcare “system”, we can see that the insurance industry has “complete control” over the health insurance “service…or market”. Why was this definition enough to break up Bell Telephone but cannot alter how health insurance is supplied? The answer is, in a word, complicated.

With Bell Telephone, we had one corporation controlling one service. In the case of health insurance, we have an industry controlling a product. Because of the restrictions including state and federal regulations, you couldn’t wake up tomorrow and start your own Insurance Company. This now gives the “industry” a monopoly based on its unwavering “control” of the “market”. What steps are needed to breakup the monopoly?

Many legislators are still discussing the idea of interstate commerce and buying insurance across state lines. This sounds good in theory but it doesn’t shake out in reality. As long as the insurance industry is permitted to continue under its current structure, interstate commerce will do nothing to change competition or cost. This should be the last cog in the wheel, not the first.

The way to neutralize any predator is to eliminate its food supply. There are three main sources in the insurance food supply. The first two involve customer supply: employer-based health insurance and Obamacare. Both of these are an endless supply of subscribers. It would have been more efficient if the President handed the insurance industry a bag of cash because that is exactly what Obamacare did. Employer-based plans are also a large chunk of the food supply, or revenue stream. If employer-based insurance plans were no longer offered and individuals had to purchase their own plan, they wouldn’t be able to afford the price employers pay. Either the individual goes without insurance or the insurance industry lowers the cost. With no employers buying thousands of plans, and individuals priced out of the market, the insurance industry is left with a product they can’t sell. Their only alternative is to lower the price to increase sales; hence a self-adjusting market.

One of the additional components that sustain the monopoly is the concept of provider networks promising superior care and lower cost. This is what drives cost higher and reduces quality of care. Allowing patients to choose their providers based on word of mouth or market research will improve quality and drive cost down. Elimination of the “networks” is necessary to return to a “patient-centric” healthcare system. Currently we have an “admino-centric” healthcare system driven by bureaucracy, over-regulation, and micro-management. Once again, elimination of the provider networks creates free market competition and reduces the insurance industry’s control over the patient and the provider.

On a side note, with the majority of health insurance being purchased through employers and Obamacare, can anyone tell me why an insurance company needs to sponsor a sports arena, advertise on television or in a magazine? This answer is simple: they are not advertising, they are doing damage control marketing. The insurance industry feels the heat. They know they are the bad guys in all of this. What is the marketing department’s response? Get out there and tell the public how wonderful they are and how much they care about you. Do they ever mention price in their ads? Never. The only time a business mentions price is when it will drive sales up. The first thing Billy Fuccillo mentions is price because his prices are good and it brings in customers! If states required insurance companies to disclose pricing in their ads, cost would come down in a transparent fashion.

The general public is also unaware of the biggest rock that the insurance industry hides behind: anti-trust laws. The way that the laws are written reduces competition and protects the insurance monopoly. If the laws were structured in a way that allowed health professions to fight the insurance bully, this would drive the elimination of the provider networks much faster. Currently member organizations such as the American Medical Association, American Chiropractic Association, American Physical Therapy Association, et al., cannot specifically tell their members to opt out of specific insurance company provider networks. Yet this is exactly what is needed to bring the insurance industry to the table.

If we want to get this fixed, we have to start with the foundation and work from the ground up. We cannot continue to throw a new coat of paint on it and expect the foundation to hold up. Remember, we cannot get someone to the table to negotiate in earnest unless they are hungry. If we take away their food supply, they will get hungry.