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May 09, 2007

Competition good for health-care industry

Choice and competition work in health care. Unfortunately, most of us aren't lucky enough to have access to a market driven and shaped by them. This year employer health-care costs have risen 7.7 percent, according to a Kaiser Family Foundation survey, more than twice the rate of inflation or workers' wage growth. This is lower than it's been in recent years (costs rose almost 14 percent in 2003). But health costs are still high - and likely will go even higher next year.

Some of your fellow citizens are luckier. This month, millions of federal workers and retirees, including members of Congress, get to pick and choose their health plans for 2007. According to the Office of Personnel Management, which runs the civil service, their insurance premiums will rise, on average, just 1.8 percent. About 63 percent of them will see no premium hike at all.

These Americans are enrolled in the Federal Employee Health Benefits Program (FEHBP), a consumer-driven system in which many different carriers offer a choice of 284 private plans nationwide. FEHBP plans include a variety of benefit packages, including health-savings accounts. The bottom line: Feds get high-quality care at competitive prices. No wonder they're highly satisfied.

The FEHBP isn't the only example where intense competition works. Another, paradoxically, is Medicare. The overall cost of the new Medicare drug benefit is a serious problem, but at least drugs are being delivered to seniors through competitive private health plans. The result: lower drug prices. When the drug benefit was enacted, the projected average monthly premium was $37.

Now, intense competition among competing plans has brought this under $24 per month, nearly a 40 percent reduction, accompanied by growing patient satisfaction. That's what choice and competition can deliver.

Live in California? click here for your free health insurance quote now!

Posted by healthinsurance at May 9, 2007 05:33 PM