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Abstract
Current health insurance markets suffer from many shortcomings. Comprehensive health care reform will be necessary to address them. Insurance market reforms and subsidies to make coverage affordable for the modest-income population within the context of a more organized health insurance market are essential strategies. A health insurance exchange can be developed to organize the insurance market and to provide guidance and oversight in achieving reform goals. Making a public health insurance plan option available to purchasers can further promote competition in insurance markets and could be an effective strategy for slowing health care cost growth.
Testimony
Mr. Chairman and distinguished Members of the Committee: Thank you for
inviting me to share my views on health insurance markets and health care reform. The
views I express are mine alone and should not be attributed to the Urban Institute, its
trustees, or its funders.
Current health insurance markets suffer from many shortcomings. I'm going to
focus my remarks on three that I believe are central, and what I think we might be able to
do under reform to address them. First the private insurance system is a voluntarily one
for both employers and insurers, but too often those who would like to buy coverage face
significant barriers to doing so, including lack of affordability and discrimination based
on health status. These barriers contribute to the growing population of uninsured.
Second, private health insurance markets are not very organized, making it difficult for
individuals and employers to effectively compare options based on price, benefits, and
quality of service. The lack of cohesive information on comparability of plan options
limits the ability of purchasers to make cost-effective choices for their coverage.
Third, there is little competition between insurers, a consequence of a substantial
amount of consolidation among insurers and health care providers in recent years. With
little incentive on the part of large consolidated providers to negotiate over price with
insurers, and insurers with large market shares being able to pass on these costs to
purchasers while continuing to increase their own profits, rapid growth in insurance
premiums is fueled.
I believe that comprehensive health care reform will be necessary to address these
problems. Insurance market reforms and subsidies to make coverage affordable for the
modest-income population within the context of a more organized health insurance
market are essential strategies. A health insurance exchange can be developed to organize
the insurance market and to provide guidance and oversight in achieving reform goals.
Making a public health insurance plan option available to purchasers can further promote
competition in insurance markets and could be an effective strategy for slowing health
care cost growth.
(End of excerpt. The full written testimony is available in PDF format.)
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