Competition in Health Care

As most know, the congress is debating health care reform right now and competition is talked about often. I think it is apparent to most that there is a lack of competition in some places in the country. The DOJ defines a HHI of over 1,800 as “Highly Concentrated” in the health insurance market and many states exceed this threshold. This means that lots of customers are not paying competitive prices.

Our congress has realized this and is trying to fix it with the current legislation. The problem is that instead of trying to increase competition in the private health insurance market they are suggesting that the government start supplying health insurance. I could understand why a smaller country might head in this direction, but why us. Currently health insurance is regulated by the states and cannot be sold across state lines. This creates many small markets in small states, which is not good for competition. Why not allow companies to sell health insurance policies across state lines and create competition by increasing the size of markets.