Impact of Antitrust Waiver for Health Insurers

October 25th, 2009 | Healthcare Reform | Market Approach

Short post watching the morning talk shows. A Rep of AHIP suggested the antitrust waiver has a small impact on premiums. Doubtful if that is the case, but even if so, the antitrust waiver enables the health insurers to force down prices with providers – and is a major factor in the consolidation of providers looking to offset that negotiating power. More important, the lack of competition in health insurance within individual states has allowed insurers to reduce the amount spent on medical care – the Medical Loss Ratio (MLRs) - and increase the amount spent on administrative costs and allocated to profit. Studying the difference between MLRs of for-profit (most of the for profit industry is consolidated into Wellpoint, United and Aetna) and not for profit health insurers makes this painfully clear.

Upshot? The antitrust waiver has permitted unbridled consolidation amongst insurers, forced provider consolidation which contributes to cost increase, and permitted insurers to maintain their profit margins by simply passing the increases back to consumers. Breaking the cycle and really reigning in costs will require a wholesale reintroduction of competition into local healthcare markets.

You can follow any responses to this entry through the RSS 2.0 You can skip to the end and leave a response. Pinging is currently not allowed.

Leave a Reply

Your email address will not be published. Required fields are marked *


*