The focus on insurance competition is wrong. The following paragraph says it all. Proponents of the so-called free market for health insurance have no idea what they are talking about.
The reality is that we have had free markets since health insurance came into vogue during WWII. Employers have offered choices for decades, Medicare offers choices and Obamacare offers scores of choices in most areas. Consumers are free to buy from many insurers and since there are both federal and state benefit mandates plan benefits are equalized. Yes, these mandates do add to premium costs, but they also lower out-of-pocket cost for individuals.
Letting consumers (better known as patients) “join pools of other like-minded consumers with similar spending and coverage preferences” simply distorts the insurance market. If you want a fair distribution of costs and relatively stable prices, you need the largest most diverse pool possible. Wouldn’t it be nice to be in a pool for auto insurance just with people who have a perfect driving record and no accidents and consolidate others in more risky pools? There is one problem, that’s not insurance‼
Our problem is too many choices, not too few.
If you want consumer shopping while controlling costs, the market competition should be with health care providers as it was, in theory at least, in the early days of insurance. All plans cover the same health care services.
Each plan uses its own fee schedule for standard procedures, doctors post or otherwise make their fees known. So, the patient knows that their plan pays $750 for a procedure and they know Doctor A charges $900, Doctor B $1,100 and Doctor C $750. If they are satisfied with Doctor C they receive care with no extra cost. If they prefer, for any reason, Doctor B, that’s their choice and their extra cost. Any Doctor can choose to accept the $750 allowance as full or partial payment. The fee schedule may be updated periodically, but is not driven by a pre-set formula. As patients can rarely shop for a hospital, insurers negotiate bundled payments.
The more patients control their own health dollars, the more they can control their own medical care. A free market in health insurance allows them such control by letting them join pools of other like-minded consumers with similar spending and coverage preferences, rather than forcing them into a health plan where the government sets their preferences for them.