Acton Institute Powerblog

President Obama Praises/Opposes Health Insurance Competition

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Our latest health care video short is up: “Why Consumer-Driven Healthcare Beats Socialized Healthcare.” And John Hinderaker of Powerline has an incisive analysis of the president’s speech last night to a joint session of Congress. The passage that stood out to me was this one about competition:

This seems to me to be the most critical moment in Obama’s speech:

My guiding principle is, and always has been, that consumers do better when there is choice and competition. Unfortunately, in 34 states, 75% of the insurance market is controlled by five or fewer companies. In Alabama, almost 90% is controlled by just one company. Without competition, the price of insurance goes up and the quality goes down.

In fact, Obama and Congressional Democrats have zero interest in increasing choice and competition. If they did, there is an easy solution. There are over 1,000 health insurance companies in the United States; why do you think it is that in Alabama, one company has 90 percent of the business? It is because there are major legal obstacles to insurance companies operating across state lines. State legislatures, and lots of the companies, like it this way. Competition is hard. But if Obama really wanted to expand “choice and competition” in health care, all he would have to do is go along with the Republican proposal to allow health insurance companies to sell on a national basis. Like, say, computer companies, beer companies, automobile companies, law firms, and pretty much everyone else.

The video and transcript of President Obama’s speech is available here. And more Acton analysis of healthcare policy is available here.

Jonathan Witt


  • savita

    Well !!!!!!!!!!!!! congrats for your new success on the health care debate….but i also want to suggest you don’t abandon the public option….

  • Bob Floyd

    Savita – The government will do to health insurance companies what it plans on doing to student loan companies—drive them out of business. Here’s how: lost amidst the uproar over health care, is a new bill before Congress that will bar private lenders from making government-guaranteed loans. As a result, the government will control 80% of the student loan market (read: public option). The remaining 20 percent of private lenders (read: health insurance companies) will be strangled by greater regulation imposed by their “competition” and be forced to exit the market. The Department of Education (read: Fannie Med) will step in to fill the void and soon American taxpayers will shoulder another trillion dollars in obligations that will be subject to the same fraud, abuse and incompetence that have given us a $37 trillion unfunded obligation (i.e. the gap between projected revenues and promised benefits) for Medicare over the next 75 years (read: we should abandon the public option!).