By MITCHELL SCHNURMAN
mschnurman@star-telegram.com
It’s obvious why Texas would benefit from healthcare reform: 1 in 4 residents is uninsured, a higher share than any state, and changes made in Washington will extend coverage to millions here.
The gains from a public option, the short name for a government-sponsored health plan, are less cut-and-dried. But they could be significant, because more Texans buy insurance on their own — and they’re more likely to be charged an outrageous premium.
When President Barack Obama addressed Congress on healthcare reform, he touted the public option as an antidote to market domination. In 34 states, he said, 75 percent of the health insurance market is controlled by five or fewer companies. He cited Alabama, because one carrier has 96 percent of the business.
"Without competition," Obama said, "the price of insurance goes up and the quality goes down."
Sounds right, but in Texas, there’s been plenty of competition — and a history of high premiums. High prices, combined with low incomes in much of the state, have put insurance out of reach for many, regardless of the providers’ market share.
The five largest carriers in Texas control just more than two-thirds of the business, according to a 2008 report by the Government Accountability Office. Only one state, Wisconsin, had a less concentrated marketplace.
What Texas needs is lower prices, not more players. Coverage has to become more affordable, so more Texans can get into the system. Presumably, a public plan would offer better rates, because it wouldn’t have to make a profit and pay dividends to shareholders.
In effect, it could keep the market honest, if it provides solid care at a lower cost.
This idea is an anathema to many in Texas, where faith in the free market trumps all. Lots of competition means lots of choice and lots of benefits for consumers — at least that’s the theory.
Except that in health insurance, the results have often been higher prices and more cherry-picking of the best customers.
"We have lots of choices, but they aren’t affordable choices," said Anne Dunkelberg, associate director of the Center for Public Policy Priorities, an Austin research group that supports reform. "Having a lot of competitors isn’t sufficient in itself."
For many years, health insurance premiums in Texas were higher than the national average, even though Texas is a low-cost state by many measures. Last year, the average premium for family coverage nationwide crept above the Texas average for the first time since 2001.
But a recent survey on healthcare costs found that Dallas-Fort Worth ranked second only to Boston among the most expensive metro areas. Texas uses a light hand on the regulatory front, consistent with its free-market ideology. While mandates for health coverage are solid, companies are generally free to set rates without oversight by regulators.
That leads to some wide price swings here. Texas is among a handful of states where rates can be up to 25 times higher for small employers, according to an insurance industry paper. A report by the Center for Public Policy Priorities found that the average maximum premium in 2006 was almost six times higher than the average premium for small employers.
Looking for comments?
Share
@Nyx.CommentBody@