• Evil Insurance Companies?

      It’s the myth of the moment: there’s no competition in health insurance!

      That’s why the government must step in to control prices.

      President Obama said: “so many of these markets are so concentrated, it's not like you can go shopping. You're stuck.”

      This is not just Democrats’ hostility to markets. It’s prevailing wisdom.

      Maine’s Republican Senator Olympia Snowe said: “there’s very little competition in the insurance market.”

      politicians often back that up by pointing to the Alabama insurance market.

      Robert Gibbs, the President’s spokesman, said: “[In] my home state of Alabama, Blue Cross / Blue Shield has roughly 89 percent of the private health insurance market, okay?”

      The president repeated that in his health care speech to Congress: “in Alabama, almost 90% is controlled by just one company.”

      But that’s wrong. It’s based on this dumb data from the American Medical Association:

      AL1

      But the AMA is wrong. Blue Cross itself says the correct number is 75 percent.

      AL2

      And that’s only if you leave out the employers that act as their own insurers. Add those companies in and the Alabama market looks like this.

      AL3

      Blue Cross has only a third of the business. That’s hardly a monopoly.

      Plus, if you go online to ehealthinsurance.com, you see that there are 72 non-blue cross health insurance plans just in Alabama. Alabama’s government website lists 39 different providers.

      But the monopoly myth is everywhere. Bill O’Reilly told me on the factor the other week that “there's only two or one insurance companies allowed to sell in most states…”

      There’s some truth to O’Reilly’s claim, in that we’d have even more choices if we were allowed to buy insurance from another state. My state, NY, forces me to pay more for insurance because my state’s legislators have insisted that every policy must chiropractic care, fertility treatments, alcohol rehab, and 48 other “mandates”. These are things I don’t want. But too bad. I must pay for them. This is insane, but I don’t hear the president celebrating the improved competition we’d get by allowing people to buy from out of state.

      Instead, Obama proposes price controls: “they will no longer be able to arbitrarily and massively hike your premiums,” he promises.

      But we have tried price controls before. First Nixon. Then Carter. The result? Gridlock at gas stations. Lines around the block.

      Give Uncle Sam the power to set insurance rates, and American health care will start to look like this:

      GAS STATION LINE SMALL

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