Congress Wants More Competition for Insurance Industry

We have 535 elected officials in Washington, most of whom have never held a real job or run a company, that have decided the insurance industry needs more governance. They say the insurance industry is a monopoly and needs more competition.

The entire insurance industry got the exemption in 1945’s McCarran-Ferguson Act on the grounds that it was not engaged in interstate commerce, and, federal anti-trust probes would interfere with state rules.

Unlike other industries, insurance companies are allowed to discuss pricing, territories and other practices that would be considered collusion if not for the exemption.

Most insurance policies, particularly health insurance, are not sold across state lines. (Exceptions are group health plans where employers have operations in multiple states). As such, companies and their products are regulated at the state level, not the federal level.

While there may not be any laws prohibiting carriers from discussing “”pricing, territories and other practices” there is no proof that such practices occur. In fact, carriers strictly guard their pricing structure and do not share it with anyone and certainly not competitors. To suggest otherwise is foolish and terribly misinformed.

New York Sen. Chuck Schumer cited Justice Department statistics that found 94% of the nation’s insurance markets are “highly concentrated” and that in nearly 40 states, two firms control over half the market.

Sen. Schumer has a law degree but never practiced law and has never held a real job. He has been in politics since 1975 which makes him qualified to do nothing other than waste taxpayer money. If in fact two firms control over half the market as alleged, that is proof to anyone who ever studied business courses or worked in the real world that they must be doing something right.

When real businesses compete a dominant player almost always rises to the top. They do so by offering a product the majority of consumers want at a price their customers deem to be competitive.

In most markets Blue Cross is the dominant player. If they are offering a plan for $400 per month and that is overpriced, other health insurance companies will simply undercut their price or deliver more value for the same price. When that happens, Blue is no longer the dominant player and they lose market share.

But if other carriers are unable to beat that price then Blue retains market share.

In many areas Wal-Mart dominates market share and they do it in such a way that competitors are squeezed out of the market. If Wal-Mart should get greedy and decide to raise prices that would invite new competition which would lessen their market dominance.

This is true of any industry, including health insurance. Why is this so difficult for Sen. Schumer to understand? Perhaps it is because he has never had a real job.

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