Why are Health Insurance Companies Afraid of Competition?

Donald Cohen
Executive Director, Center on Policy Initiatives
Huffington Post
Posted March 26,2009

Are insurance companies really saying "Competition works, but not when it works against us?"
The Health Insurance industry is already gearing up, once again, to fight Obama's health care plans. This time it's not Harry and Louise, but rather cries of unfair competition with a successful model of government organized health insurance.

Insurance companies, along with other vested health care interests, have successfully thwarted every serious attempt at universal health insurance since the New Deal and are taking no chances to keep a solid streak. The standard line of attack is to raise the specter of government-run health care, long lines and losing our choice of doctor. They back it up with endless repetition of ideological arguments that free, unregulated markets are the only way to meet America's needs.

Now, the insurers are crying foul about President Obama's plan to create a public Medicare-like insurance product that Americans could choose to purchase. In a letter to Obama, five senior senators including Mitch McConnell and Charles Grassley said that "forcing free market plans to compete with government-run plans would create an unlevel playing field and inevitably doom true competition." The term "free market plan" is a clever choice of words intended to obscure that these are actually just normal private, for-profit insurance plans.

What makes this ideological about-face so remarkable is that insurers and industry funded think tanks have been arguing for years that competition is the best mechanism to keep costs down and quality high. The message is clear - competition works, but not when it works against us! Read the entire article at Huffington Post.