Blue Cross Snuffs Out the Competition

Here we go again with another idiot post in the lame stream media about how carrier domination is proof positive there is a lack of competition which leads to price gouging.

Pea-brain cub reporter Sean Stillmaker posted this in the Chicagoist.

In Chicago Blue Cross Blue Shield covers 66 percent of the market – more than any other provider in a metropolitan area. In 54 percent of metropolitan markets at least one insurer had a market share of 50 percent or more, according to a study by the American Medical Association. “An absence of competition in health insurance markets is clearly not in the best economic interest of patients,” said Dr. Rohack of AMA.

Of course, Dr. Rohack must share some of the blame for this kind of stupidity.

Anyone who has even a smattering of knowledge of business economics knows when one company, in this case Blue Cross, has a lions share of the market it is BECAUSE they are more competitive than other health insurance companies.

Consumers are prone to premium increases with insurer monopolies.

For starters, there are no true monopolies in health insurance. Even if there were, premium increases have nothing to do with a monopoly.

In this case, Blue has 66% of the market. This means that X number of other health insurance companies make up the remaining 34%.

If Blue were to exercise their magical “monopoly” power and raise rates by (picking a figure out of the air) 39%, this would leave the door open for one of more of the carriers that make up the other 34% to swoop in and deprive Blue of their market share.

Blue Cross Blue Shield of Georgia used to dominate the individual and small group market but they started losing market share about 5 years ago.

The reason?

They started raising prices to the point that new carriers could come in an take away market share. They still are a dominant player but that is mostly by reputation. Anyone who shops and compares plans and prices will easily see there are many other options that deliver more value than BCBSGA.

When you hear someone say that market dominance is proof there is no competition you can look them squarely in the eye and proclaim they are an idiot.

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