Need info on "rising premiums" in insurance and lack of competition

[Lord Xar]

Hello,

I was under the impression that a significant reason for increased premiums, in insurance, was due to the lack of competition - so prices can rise unabatted since the 3 or 4 insurers can price fix.

I vaguely remember reading about some legislation that only allows a certain number of "insurers" per state, thus reducing competition.

Am I totally off base here - if not, can someone cite some resources so I can review.

thanks

[dannno]

I'll let Garth explain:

http://404uxd.com/images/134.jpg

The main reason is actually the corporatization of health care which occurred in the 70s when the government decided to give tax breaks to medium to large sized corporations who gave their employees health insurance, but did not give corresponding tax breaks to individuals who purchased their own health insurance.

The result was that health insurance became significantly less expensive if you bought it through your employer for the simple fact that it wasn't taxed.

Thhhhheeeeeeeeennnnnnn all of a sudden people got into these huge group plans under their employer where the benefits and premiums were the same whether you were a young, healthy individual or an old, unhealthy one.

Here are the results:

1. People threw as much money behind their corporate health insurance as possible, thus fully insuring themselves for every possible transaction which could be considered medical expenses by the establishment. This takes away competition because practically nobody shops around for their medical visits or procedures. Everything is covered by insurance.

2. There is no monetary incentive related to health expenses to stay healthy. It doesn't matter if you get a lot of exercise, eat high-end wholesome foods, take additional dietary supplements to increase health or whether you eat fastfood and watch tv.. your medical expenses are the same either way on your corporate plan.





Solution: Allow all medical expenses to be tax deductible, including individual insurance. This would ultimately take care of the pre-existing condition issue which so many progressives like to bring up because people wouldn't lose their health insurance when they switched jobs and were perhaps unemployed for a short time.





**You are also correct that insurance is very limited, often by the states themselves. This is one area where the Federal Govt. SHOULD step in and enforce the "commerce clause" to allow people to buy health insurance from companies in other states or even other countries if they choose.

[oyarde]

Competition is part of the problem . As an example , there are several hundred companies in the US that sell policies , California has probably less than tewnty of these to choose from.The insurance needs opened up .

[phill4paul]

Also remember that states require certain coverage from ALL insurers that sell within their state. This raises the cost of premiums from state to state. In N.C. for example all insurers are required to provide coverage for wigs to those that undergo chemotherapy. In N.C. there are about two hundred such provisions. This does not allow an individual to buy into a plan that does not cover this.

The one thing that Congress is allowed to do is regulate interstate traffic. It is the one thing they fail to do in this instance. If a company in Indiana had a cheaper plan with less coverage I would be unable to purchase it.

[oyarde]

Correct , I should be able to buy whatever I would like regardless of state . I can do this with life and auto insurance .