Democracy Under Assault
Theopolitics, Incivility and Violence on the Right

Michele Swenson

The illusion of 'free-market' health care

The illusion that free-market competition among private insurance companies will lower health costs is belied by the fact that health insurance premiums have risen 78 percent from 2001-07. Health care spending in 2007 is 16 percent of GDP, projected to increase to 20 percent GDP by 2010.

The truth is that the private health insurance industry is increasingly a monopoly market, dominated primarily by three national behemoths, UnitedHealth, Wellpoint, and Aetna. Premiums continue to rise each year, faster than the rate of inflation or workers' wage increases.  Simultaneously, individuals experience less health care access and denial of free choice of providers and hospitals.

The fact is that the private insurance industry spends about 20 percent of its revenue on administration, marketing, and profits, and imposes another 12 percent administrative cost on providers and hospitals. The one-third of private insurance premiums that go to adminsitrative services could be drastically reduced by instead financing health care through a single non-profit or public fund. Studies have shown that replacing multiple private payers with a single national health insurance program would save $350 billion annually in wasteful spending, enough to cover all of the uninsured, and improve coverage for the underinsured.

As Leonard Rodberg and Don McCanne of Physicians for a National Health Program have stated, a single payer plan would make possible a set of mechanisms, including public budgeting and investment planning, that would allow us to address the real sources of cost increases and to rationalize our health care investments. The drivers of high cost such as administrative waste, deterioration of our primary care infrastructure, excessive prices, and use of non-beneficial or detrimental high-tech services and products could all be addressed within such a rationalized system.

A single payer insurance would address the obstacle of secretive proprietary data maintained by each commercial insurance company, and permit instead the transparency and accountability of a viable information technology system for tracking of data to enhance evaluation of best health care practices and quality outcomes.

McCanne and Rodberg note that we will not be able to control health care costs and achieve affordable coverage for everyone until we reform our method of financing health care.