Highmark chutzpah: Pennsylvanians have a right know what big insurers are up to
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If there is one clear truth from the yearlong health care debate in Washington, it is that health insurance markets are broken. Most are dominated by a single insurer, which has resulted in escalating premiums, skyrocketing profits and record numbers of uninsured. Few states have the resolve or resources to take on these monopolies.
Here in Pennsylvania, Insurance Commissioner Joel Ario has been investigating the conduct of the state's four Blue Cross Blue Shield plans, seeking to identify anticompetitive practices and repair our broken health insurance market. But as he was poised to expose their practices, Highmark, the insurance monopolist in Western Pennsylvania, sued, claiming that the department was unlawfully exceeding its investigative authority.
This act of chutzpah should be rejected by the courts and Mr. Ario should be permitted to do his job.
One can imagine why Highmark feels threatened: No monopolist likes competition, especially one that has divvied up a state so cozily with associated companies. And no monopolist wants its anticompetitive designs exposed to the light of day.
In Pennsylvania, the four "Blues" -- Highmark, Independence Blue Cross, Blue Cross of Northeastern Pennsylvania and Harrisburg's Capital BlueCross -- dominate the market. Two years ago, when there was a threat that competition might break out between IBC and Highmark, they proposed a merger to avoid it. The U.S. Department of Justice gave the plan its blessing, but Mr. Ario said no.
Now the insurance commissioner seeks to spotlight the underlying agreement between the Blues and tactics that stifle competition. It is believed that Highmark, for example, intimidates brokers so they will not handle policies for other insurers. This, of course, helps Highmark keep prices high because it doesn't have to worry about being undercut by competitors. No wonder Highmark feels threatened by Mr. Ario.
A study by the Center for American Progress found that state departments of insurance are remarkably inconsistent in their enforcement of consumer protection laws against health insurers. While a handful are fairly active, fully a third of the 33 states we surveyed had brought no significant consumer protection actions in the past five years. Even more alarming, no states had brought antitrust actions against health insurers, even though it is clear that many markets are locked up.
Fortunately, Pennsylvania, by challenging the Highmark/IBC merger and investigating the Blues, is a pioneer in using its powers to protect consumers and ensure competition.
Nothing could be a stronger indication of why we need health care reform to work than Highmark's efforts to hide the truth about its anticompetitive practices. To have any hope of significantly lowering health care costs, we must open our concentrated health insurance markets to competition. Efforts like Mr. Ario's are essential for health care reform to succeed.
First Published March 26, 2010 12:00 am
