President Trump met with health insurance CEOs at the White House Monday to discuss the future of insurance, largely vis a vis Obamacare. In attendance were chiefs from UnitedHealth Group, Aetna, Anthem, Cigna, Humana, Independence Blue Cross, Kaiser Permanente and BlueCross BlueShield of North Carolina.
The meeting comes amid pressure from the public on the White House and Congress to release a plan for “repeal and replace,” which Trump now says he will be able to speak to at Tuesday night’s joint address to Congress. However, between today’s meeting and a leaked draft of the GOP plan, it looks like health insurance companies will once again be calling the shots in the health insurance market.
The health insurance market is highly concentrated
While there may have been a decent number of men around the table today, the reality of the market is that fewer and fewer players dominate the vast majority of local health insurance markets. Take Anthem and the Blue plans, who do not compete with each other because they belong to an association that has agreed not to compete or invade each other’s geographic territory (the trade-off for beneficiaries is a national network for Blue Card holders). Therehen there is an argument to be made that Kaiser Permanente should not be included in this cohort because its business model as an integrated healthcare delivery system is so different from the other companies represented in the room. What you are left with is five companies that make up the entirety of the national market for health insurance.
Studies show that when markets are concentrated, especially in the health insurance market, prices go up, quality goes down, and innovation suffers. Additionally, two major merger trials just wrapped up – with both the Anthem-Cigna and Aetna-Humana mergers being blocked on grounds of anticompetitive effects and likely consumer harm. Health insurance companies are profit-maximizing corporations with incentives toward gaining market power. As our national discussion around health insurance goes forward, these facts are important for consumers to keep in mind.
GOP rhetoric misses the mark for consumers
The president on Monday said, “The new plan will be a great plan for the patients, for the people and hopefully for the companies. Going to be a very competitive plan. And costs will come down and I think the health care will go up very, very substantially. We’ve taken the best of everything we could take.”
He also cited competition after the CEO meeting, reiterating a desire to sell insurance across state lines, something that is currently possible for companies under the Obamacare.
However, specific promises of vital consumer protections that are present under Obamacare have been strikingly absent from Trump’s comments. Experts have concluded that the GOP plan as written would leave tens of millions of Americans worse off, especially older or sicker Americans. Top Republicans in the House have focused on “access” as a metric in the replacement plan, rather than likely coverage. Those who were struggling to afford coverage before the Affordable Care Act are likely to find themselves in much the same situation if the replacement package does not include consumer protections and subsidies that have successfully allowed patients to access affordable, quality healthcare.
President Trump additionally had some off-the-cuff remarks that should sound the alarm for consumer advocates. He mused that Congressional Republicans should allow the law to implode – citing a timeline of around the next two years – and let the Democrats own whatever happens. Hopefully he will clarify this comment tomorrow night. Would funding for protections executed by the states be continued? Would exchanges be open for business? Or would Obamacare be allowed to spiral downward in the most devastating way for consumers—piece by piece?
“It’s an unbelievably complex subject. Nobody knew that health care could be so complicated.”
After a subsequent healthcare meeting with many state governors, Trump delivered the puzzling quotation, “It’s an unbelievably complex subject. Nobody knew that health care could be so complicated.”
That’s troubling coming from the man who should be providing leadership on a central campaign promise. Yes, healthcare is complicated. Consumers need to feel reassured that their representatives can come up with a plan that works, and works better than Obamacare. That did not happen as a result of today’s meetings. Selling insurance across state lines, expanding health savings accounts, and leaving more to the states will not make consumers better off.
Healthcare is a complex subject. But what should not be complex is the idea that any replacement to Obamacare should meet a few basic standards for consumers.
Replacement should cover the same number of Americans. This is distinct from “access” without regard to price. The outcome of any changes should be that the same number of people are insured under a new plan.
Coverage should be of equal or greater quality. Consumer protections in the Affordable Care Act made sure that insurers weren’t selling junk plans or selling plans to women that did not cover basic reproductive services. If the GOP replacement has the same number of people covered, but their coverage is worse, we will see outcomes like an increase in medical bankruptcy, unintended pregnancies, and decreased utilization of preventative care.
Discrimination should be considered unacceptable. Whether it’s due to a pre-existing condition, gender, or residency, basic access to healthcare should not be denied to classes of people. The “spirit” of the Affordable Care Act included the idea that all Americans have a right to a baseline level of health insurance coverage. To take that away from vulnerable people whose lives have improved drastically as a result should be seen as un-American.
Competition – the piece de resistance of the GOP plan – must be legitimately bolstered through sound regulation and antitrust enforcement, including blocking any future mergers that would increase concentration. While this may not be a direct feature of the replacement package, it is indispensable to making the health insurance market work for consumers and taxpayers.