Is The Answer To A Lack Of Competition In Health Care Now Less Competition With Gov. Health Care?

In an apparent attempt to neutralize one of the chief complaints against the Democrats’ plans for health care – that it would stifle competition in the private health care industry – the Associated Press is running this story indicating that there’s little competition in the existing private health care market.
And the report is right. There is little competition in the existing health care market.

WASHINGTON – One of the most widely accepted arguments against a government medical plan for the middle class is that it would quash competition — just what private insurers seem to be doing themselves in many parts of the U.S.
Several studies show that in lots of places, one or two companies dominate the market. Critics say monopolistic conditions drive up premiums paid by employers and individuals.
For Democrats, the answer is a public plan that would compete with private insurers. Republicans see that as a government power grab. President Barack Obama looks to be trapped in the middle of an argument that could sink his effort to overhaul the health care system.
Even lawmakers opposed to a government plan have problems with the growing clout of the big private companies.
“There is a serious problem with the lack of competition among insurers,” said Republican Sen. Olympia Snowe of Maine, one of the highest-cost states. “The impact on the consumer is significant.”

This is a problem, but it has to do with the tax and regulatory environment surrounding health care in America not a lack of a government-backed competitor for private health insurers.
A big problem is that, for most Americans, the health care plans they’re on were negotiated by other people. Usually their employers and the insurance companies. Rather than hundreds of millions of individual Americans in the market for their own health care, we have significantly fewer employers who shop for insurance for other people.
What’s more, because the premiums for employer-provided plans are deducted from paychecks pre-tax, there is a heavy tax incentive for getting your insurance through an employer instead of on your own. A private plan might cost you thousands of dollars more in taxes than an employer-provided plan. Individuals have little incentive to buy individual plans, and insurance companies have little incentive to issue such policies.
Additional government regulations such as restrictions on offering plans across state borders or insurance mandates which drive up the cost for plans by forcing people to pay for coverage they don’t need limits choice in the market, and thus competition.
What we should be focusing on isn’t more dependence on third-party health care payers, whether those third parties be employers or co-ops or the government. What we should be looking at is making health insurance an individual thing like car insurance, life insurance, home insurance, etc. It can be done, and we don’t need the government to take over everything to do it.