Solutions to break up BUCA monopoly on health insurance market

Oct 14 2009

What Congress is doing about the healthcare dilemma that's currently facing them is flat-out wrong, according to Samuel H. Fleet, President of AmWINS Group Benefits. Not one of the bills being considered focuses on breaking the stranglehold the BUCA monopoly -- Blue Cross/Blue Shield for profit plans, United Healthcare, CIGNA and Aetna -- has on the health insurance market. In fact, Fleet insists that many of the provisions of the health care reform bills will actually make the monopolies more powerful.

Today, Fleet released his second health care reform position paper, "Time to Stop Playing Monopoly with Health Insurance," which proposes two key solutions that will help restore competition and allow smaller health plans to have new opportunities and thrive in the health insurance market.

Fleet compares the health care reform debate with two familiar examples: phone calls and razor blades. He draws a strong comparison between the BUCA monopoly with the 1983 breakup of AT&T, a regulated monopoly that the federal government encouraged for decades as a way to build a nationwide network of phone lines. Fleet believes that just like AT&T, the BUCA monopoly is growing so large that the initial benefits provided are now being overtaken by their ability to operate like an oligopoly.

"They are able to hold service providers hostage to lower and lower reimbursement rates, they generate larger and larger profits for themselves that are not passed on to consumers, and they protect turf by blocking entry for smaller firms," says Fleet.

Fleet suggests the reason BUCA customers put up with this pattern is because the "razor" is cheap and no one pays attention to the cost of replacement blades. From a healthcare standpoint, Fleet explains that the BUCA promise very high discounts on the cost of healthcare procedures, but then charges very high rates for the administration of these plans.

Following are Fleet's solutions to break up the monopoly power of the BUCAs:

• Apply the anti-trust Robinson-Patman Act to smaller service providers - This law protects small retailers from being forced out of the market by large stores that can demand special pricing from suppliers. Similarly, an amendment to include service providers will protect these smaller health plans by eliminating the ability of BUCA insurers to control the health insurance marketplace.

• Set procedure reimbursement rates at a fair cost - By doing so, dozens of companies stifled by the big health insurance monopolies can innovate, excel and compete to lower the cost of administering health insurance benefits.

"Ultimately, health care reform should be about affordability and accessibility," says Fleet. Instead, Fleet suggests that instead of focusing on the rising cost of health care and its causes, politicians have chosen to focus on insurance reforms, thus treating the symptoms of the illness and not the cure for the disease.

SOURCE AmWINS Group Benefits