In Germany, every citizen is mandated to purchase health insurance through government organized Health Funds, unless your income is above 48,600 Euros per year, or approximately $68,000 at current exchange rates. If you make over the threshold, you may purchase health insurance from private insurance companies. Approximately 90% of Germans purchase their health insurance through the government administered Health Funds, many of whom have the option of purchasing private insurance instead.
Knowing these facts, if I told you there was a city where 94% of the insured purchased insurance through one provider, and the next largest provider insured only 2% of the insured in the metropolitan area, you might think we were talking about a German city where fewer people met the threshold for opting out of the government system. But I’m not talking about Germany – I’m talking about Joplin, MO! The major provider, Wellpoint, Inc, the largest health insurance company in the United States, insures 94% of all policyholders in the metropolitan area of Joplin. That’s a city in the “free market” health care system here in the US, right here in Missouri.
Now, I’m not a lawyer, and I understand there is some haziness on the precise definition of the term “monopoly”, but 94% raises a little more than an eyebrow. Looking at a report put together by Health Care for America Now, it’s not isolated to Joplin, either. Outside of Kansas City and Saint Joseph (who have their own 800 pound gorillas in the marketplace), Wellpoint has a market share of over 60% in every metro area in the state:
For Missouri as a whole, Wellpoint insures 68% of the population lucky enough to have health insurance. Now, to be clear, I don’t have a problem with the market share per se – if a company is awesome and provides quality, affordable health insurance for its policyholders, making sure that they have access to effective treatments, pooling risk and employing other cost containment measures to make sure prices don’t skyrocket, well then, that would be worth high praise. But as you can see from the graph below, costs are spiraling out of control. The average premium has increased 76% (!!) in the last eight years, while incomes have risen only one quarter that rate.
And lest you think these premiums were going straight back into investing in increased quality, think again. As market share increased, Wellpoint’s bottom line rose by a staggering 1,380%! During the same time, Missouri continues to lag behind other states in terms of quality and access, ranking 37th overall in a Commonwealth Fund health care report.
It’s pretty clear that the “free market” has failed us in terms of quality, access, and affordability. It has allowed the favored few to create a bigger pool for themselves to play in, while we get stuck with the bill. That’s why we need a public plan to offer a real option for Americans to get quality affordable health care. If the health insurance companies think that competition is the best way to deliver quality health care, they’ll actually have to start competing against someone who aims to deliver it.
More on the public plan tomorrow.