Monopolies Control Health Insurance

Like pathetic knights of another era jousting at windmills, industry shrills attack health care reform, claiming it “tramples individual liberty” and stifles “free enterprise.”

Far from protecting individual liberty or promoting free enterprise, these forces uphold monopoly control of health care insurance that has a stranglehold on American consumers. And they pay huge sums to control the debate and twist legislation to their advantage.

Since 1998, over 400 mergers left two conglomerates in control of the huge health care insurance industry. Mergers allowed insurers to raise prices, buy influence in Congress, and redistribute cost savings to shareholders. Consolidation increased rapidly. Between 2004 and 2005, 28 health care mergers, valued at $53 billion, outpaced the number of health care mergers in the previous eight years combined.

Low interest rates, leverage and lax anti-trust enforcement by the Bush Administration allowed conglomerates to take control of the health insurance in the U.S. A 2009 report from Fortune Magazine reveals that the revenue of the top two companies account for $142 billion or 36 percent of the health care insurance market, while the top four gross $202 billion, almost three quarters of all health insurance.

“During the Bush administration, there were no enforcement actions against health insurers’ anticompetitive, deceptive or fraudulent conduct,” David Balto, senior fellow, Center for American Progress, told the Senate Committee on Commerce, Science and Transportation in July 2009. “There was tremendous consolidation in the market, and the Justice Department simply required minor restructuring of two mergers. There were no cases against anticompetitive conduct by health insurers.”

Health insurance monopolies do business under pseudonyms to hide their identities and project a false impression of competition in the industry. The largest, UnitedHealth Group, reported $81 billion in revenue in 2008 and sold products under such names as OptumHealth, Ovations and AmeriChoice. WellPoint, the second largest, has revenues of $61 billion and insures 35 million people under Unicare and Blue Cross/Blue Shield. Concentration is even greater on a state-by-state basis.

A 2006 study by the AMA found that health insurance is “highly concentrated” in 94 percent of the states, and in a majority of the nation’s largest metropolitan areas a single insurer controlled more than half the business. A 2007 study by Health Care for America Now found that in 38 states, the top two insurers control 57 percent or more of the market, and in 15 states one insurer controlled 60 percent or more of the market.

Facing the monopoly power of UnitedHealth Group and Wellpoint, smaller firms cannot compete: Aetna ranks third with $31 billion in revenue, and Humana is fourth with $29 billion. Of the 14 health care insurers, the smallest eight have yearly revenue of less than $12 billion.

Such concentration stands in stark contrast to a “free enterprise” system where companies compete to lower costs and provide consumer choices. Instead, monopoly control raises prices unilaterally and controls every aspect of clients’ health care. No wonder insurance premiums increased an average of 87 percent in the past six years, according to FamiliesUSA.

Economists point out that most wage increases went to pay for health insurance from 2000 to 2009. For example: In New York, the cost of health insurance increased 93 percent, while wages increased 14 percent; in California, health insurance increased 109 percent, while wages increased 26 percent; and in Texas, health insurance rose 80 percent, while wages rose 11 percent. Insurers also have “monopsony” power to dictate prices and coverage terms to hospitals and doctors, with profits redistributed to shareholders. Profits increased apace.

According to SEC filings, the major health insurers increased their profits over 400 percent from 2000 to 2008. Overall, profits rose from $2.4 billion in 2000 to $13 billion in 2007. CEOs were paid accordingly; their pay reaching 468 times that of the average American worker, with money left over to lobby against reforms.

According to the National Institute on Money in State Politics, the health care industry paid almost $400 million to politicians in state governments in the past six years. The Center for Responsible Politics discovered the industry spent over $1 billion in the past two years to oppose real reform. As the debate progressed, important consumer protection provisions were whittled away.

“Although the overwhelming majority of the American people support it, there’s no public option, no end of the anti-trust exemption for the health insurance industry, no option for people over 55 to buy into Medicare, no ability of the government to negotiate drug prices or import cheaper drugs from Canada, and no real regulation of health insurance premiums,” said Zack Kaldveer, spokesman for the Consumer Federation of California. “Yet, Congress is mandating everyone to purchase an overpriced product from a corrupt system. If premiums continue to rise, we’ll be stuck wasting money on an unsustainable health care system.”

The insurance monopoly is pouring millions of dollars into creating misleading catchwords, carefully chosen to guide our opinions. Reforms are needed to protect consumers from a vast monopoly, slowly draining our paychecks into for-profit conglomerates. Without strict controls over these monopolies, we will be stuck with the same old predatory system.

Don Monkerud is an California-based writer who follows cultural, social and political issues. He is the author of America Unhinged: Politics and Pandemic in the 2020 Election (2021). He can be reached at: Read other articles by Don.

8 comments on this article so far ...

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  1. rosemarie jackowski said on January 16th, 2010 at 2:09pm #

    Calling for ‘strict controls of insurance company monopolies’ is like calling arsenic a health food. We need to ELIMINATE all medical insurance companies. Some things are so harmful that they must be destroyed, eliminated, killed. They have blocked health care for a long time and they are responsible for the deaths of more than 45,000 per year – that makes insurance companies more dangerous than terrorists.

    We don’t need health insurance we need SINGLE PAYER, UNIVERSAL, COMPREHENSIVE health care. That will never happen as long as there are insurance companies controlling the Congress.

  2. bozh said on January 16th, 2010 at 3:00pm #

    Corporations and other rich people r allowed to charge as much as they like or think they can get away with. Everything that happens in US is systemic. Nothing can be allowed in US unless it belongs to the system.
    The richer some people get, the richer the visible iceberg of the system, the pols, get and also get more money for their campaign and public attention!

    Telling people what is happening is desirable, a + of some kind. Telling why is happening what is happening and how to stop it from happening is enlightening.

    Telling people how-why an event occurs, involves some structure, and structure can be seen with naked eye and thus understood; problems found and corrected.

    It seems to me that structure is the only content of knowledge. In case of letting people charge as much as they can, its structure wld reveal its structural members: constitution, judiciary, congress, ‘educators’, clergy [or most of them], media people, cia, WH, fbi, army echelons.

    To know how a house wld stand and endure u need to know not only the lumber used, but also function of studs, joists, ground on which it’ll stand, trusses, nails,etc.
    Remove just one of its structural members and u aint gonna have a house, but …..
    So what is the function of cia or generals, etc., in the unilaterally raising prices? Or drawing salary of mns?
    Cld one charge as much as one likes unless cia and army generals do not approve of?
    I suggest if one wld much overcharge, army, cia, et al wld demand congress do s’mthing ab it. And if congress wld refuse, u may have an army putsch.

    So, knowing the roles each member of a structure plays produces an elucidation or as folks wld say, knowledge. Without which, u go nowhere.
    The members of the above branches of governance wld never tell u this. They use collumnists to obnubilate this simplicty or one cld say that is the role assigned to them as members of the same structure.

    It is not mystery how US functions. It is only a mystory if one solely gets info from media. Its main function is to complexify anything that is easy to understand.
    And since no complexity can be understood [and media knows this; thus its use], people just give up or think they r too dumb and blame selves.

  3. lichen said on January 16th, 2010 at 3:57pm #

    Rosemarie is right; we need single-payer healthcare, not the continuation of private insurance corporations; not false corporatist claims of “consumer choice” when what you can’t choose in this country is your quality of life because it is decided by money and the right wing government that keeps you poor, sick, polluted.

  4. Don Hawkins said on January 16th, 2010 at 6:48pm #

    It is not mystery how US functions. It is only a mystory if one solely gets info from media. Its main function is to complexify anything that is easy to understand.
    Appears so.

  5. Tonyandoc said on January 16th, 2010 at 9:17pm #

    The healthcare fiasco is only a symptom of the disease that forces the elected and career members of all three elements of our government to treat people as resources whose sole purpose is to feed business and other institutions.
    Conventional wisdom holds that for individuals, power corrupts and absolute power corrupts absolutely. However, without an institution or organization through which to wield power, no individual can be powerful. So it is probably more correct to say, “Institutions corrupt and monopolies concentrate corruption.”
    People were able to control this somewhat until the law granted institutions the same rights as real people. The result is that democracy, a process and culture designed originally so that a country embracing democracy would focus its resources, including institutions, on serving the people, has been turned on its head so that now people must serve the institutions.
    Healthcare is only one example. Both the root cause of and response to the financial crisis is another, as is the fact that National Security resources are primarily concerned with protecting themselves (an institution) and the government (another institution) from the people.
    Until the primacy of the people is restored, this perversion will continue.

  6. Don Hawkins said on January 17th, 2010 at 1:51pm #

    A new way of thinking and soon.

  7. bozh said on January 17th, 2010 at 3:27pm #

    Tonyandocs writes,
    The healthcare fiasco is only a symptom of the disease that forces the elected and career members of all three elements of our government to treat people as resources whose sole purpose is to feed business and other institutions.

    With respect, one ought to add the govts selves are a mere part of one governance; consisting of the constitution- really a law; written, among others, also by slave owners- cia, fbi, army, congress, WH, media, educators, clergy.

    All of these members of the system of rule act in unison; there appears not a mm of difference btwn a prez, cia agent, priest, educator, general on moral and legal level. I am having in mind that each US law is perfectly just. Thus, nothing US does is illegal!
    So, it is not health care, but also disinformation, warfare etc., which r also mere symptoms of a disease and the disease in my eyes is the whole organism headed by the worst constitution ever written.
    Worst, of course, for indians and neo-indians and best ever for the ruling class! tnx

  8. Don Hawkins said on January 18th, 2010 at 6:13am #

    This election in Massachusetts is different here in the greatest nation on Earth. This one lady I saw on TV said we don’t think government control of health care is good for America. Oh dear the message is getting out.

    How does Glenn Beck say that “this is so cool”.