New Fox News piece: Demonizing the Insurance Industry Is Not the Answer

My newest piece with Scott Harrington starts off this way:

In a last ditch effort to cram their health care reform package through Congress, Democrats have ramped up their demonization of private health insurers. They blame an alleged lack of competition in health insurance for all sorts of ills – from higher premiums to insurers denying coverage based on pre-existing conditions or dropping people who get sick.

According to the White House blog last week: "the insurers’ monopoly is so strong that they can continue to jack up rates as much as they like." In The New York Times on Friday, Paul Krugman attacks what he calls the "vileness" of profit driven insurance companies. These arguments are echoed in Congress. In an ostensible effort to promote competition, the House recently passed legislation to exclude health insurance from the partial anti-trust exemption for the “business of insurance.” The 39 percent premium increase by Anthem Blue Cross for its individual (non-group) policyholders in California is continually touted as evidence of this monopoly power.

But what are the facts of this alleged monopoly power? Despite claims that it produces huge profits, health insurers’ profits generally average 3-5 percent of premiums. During the first nine months of 2009, profit margins were just 2.4 percent. . . .