The insurance companies’ definition of ‘competition’

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Insurance companies love their free market, and corporations in general love the idea of competing against government, i.e. outsourcing government services to private companies (see: Iraq War). But insurers and their well-oiled friends in government see public-private competition in health care as Armageddon. We get what the real problem is: public health care is cheaper because it doesn’t suffer bloated overhead, profits and CEO salaries. But Donald Cohen of the Center for Policy Initiatives has a nice takedown of the insurers’ public arguments.

Cohen says today on HuffPost:

In a letter to [President] Obama, five senior senators
including Mitch McConnell and Charles Grassley said that "forcing free
market plans to compete with government-run plans would create an
unlevel playing field and inevitably doom true competition."

The term
"free market plan" is a clever choice of words intended to obscure that
these are actually just normal private, for-profit insurance plans.

What makes this ideological about-face so remarkable is that
insurers and industry funded think tanks have been arguing for years
that competition is the best mechanism to keep costs down and quality
high. The message is clear – competition works, but not when it works
against us!

For years, former Indianapolis Mayor Steven Goldsmith and a gaggle
of conservative think tanks like the Reason Foundation, Heritage
Foundation and others have often argued the benefits of competition
between the public and private sector for taxpayers.

The libertarian Reason Foundation is an intellectual leader of a
national pro-privatization policy and message machine. In their own
words, "the added incentives provided by competition will lead to lower
costs and higher quality services. When government competes, the
taxpayer wins every time."

Reason’s push for government to compete with the private sector to
deliver services often results in reducing costs by cutting wages and
health and retirement benefits of middle class public sector workers.
By contrast, Public-Private Competition in health insurance will
squeeze overhead and profits from the middlemen in the system so we can
put more money into actual health care.

So private-public competition is good when it’s Blackwater’s gun-toting security guards splattering the streets of Baghdad with gunfire, but not when it’s Medicare forcing insurance companies to ratchet down their overhead. 

Consumer Watchdog
Consumer Watchdog
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