By David Henderson
The congressional leadership has been very vocal lately about the need for competition in health insurance. These are people who have previously never had a good word to say about “competition” in their entire political careers. They are the very same people who have previously resisted (and even ridiculed) proposals to allow health insurers to compete across state lines.
They hate the idea of private Medicare Advantage plans competing with Medicare. They tolerate (but dislike) the “privatization” of Medicaid. They steadfastly resist using S-CHIP or Medicaid funds to pay employer-provided insurance premiums. But they are born-again free enterprisers when it comes to the newly envisioned “health insurance exchange.”
This is from health economist John Goodman, a long-time advocate of actual competition.
He comes up with the following theorem:
When health plans are not allowed to compete on price, they will not compete (in a positive way) in any other dimension either.
The whole thing is worth reading. As a bonus, Goodman often, as he does in this case, links to songs from the 1970s. This is one is from the Bee Gees.