As any capitalistic market functions more effectively with competition, leaders are concerned that a lack of competition among health insurance companies is resulting in huge costs for individual policy holders. In examining a lack of competition on a smaller scale, any American can simply imagine how, for example, a local pizzeria could demand incredibly high prices for its food when no other pizza restaurants are nearby to force lower rates. Once a new pizzeria comes to town and begins offering greater promotions and discounts, however, the pre-existing restaurant is subsequently forced to reduce its own prices in order to compete with the new, more enticing and affordable, competition.
Similarly, as the debate over health care reform continues to gain attention and friction, new reports suggest that opening the current health insurance market to greater forms of competition would result in dramatic health cost reductions.
Will Competition Lower Health Insurance Costs?
Rumors have circulated that government reform of the current health care system would result in an elimination of competition among health insurance companies; however, recent students reveal that the opposite may be true. According to reports, major cities and areas across the country are only provided with two major health insurance competitors-when these few providers dominate the market, policy holders are unable to take advantage of competitive cost reductions and promotions.
To combat this issue, many republicans and democrats in congress agree that the lack of competition among health insurance companies is causing immense consumer overcharges and fees. As such, some political believers argue that a government reform of the industry could offer a more equitable balance of costs and package deals, as the competition among insurance providers could be restored, allowing for policy holders to gain greater cost reductions and savings. As many political and economic leaders assert, health insurance companies currently have no incentive to negotiate with their policy holders, network hospitals, or other organizations. As a result, higher premiums can be more steadily sent along to the patients, as the patients are forced to pay the costs demanded by their health insurance provider.
Tags: health costs reduction, health insurance companies, health insurance costs, health insurance market, higher insurance premiums, policy holders