A Private Insurance Monopoly?

by Reihan Salam

After listening to Dylan Ratigan’s hectoring of Debbie Wasserman Schulz, a member of Congress from Florida, I was struck by his repeating references to the “private insurance monopoly,” an idea that gained considerable traction in light of the left’s revolt against the individual mandate. Ezra Klein sheds light on why the notion of a “private insurance monopoly” doesn’t make much sense given the presence of a wide array of competing insurers, even in the context of heavy federal regulation.

In fairness, I don’t think Ratigan is referring to a literal monopoly. Rather, he is invoking the possibility of a kind of implicit collusion, in which a cartel of private insurers collectively drive up prices. He has a figurative “trust” in mind. And he does make a reasonable point that conservatives have also made: in the absence of an external “check,” the Reid bill really does represent a windfall for private insurers.

I’m struck by something else: if critics on the left are so concerned about private insurance monopolies, and it really is true that some states have very little competition among private insurers, why don’t they favor lifting the ban on interstate competition? The Reid bill allows “interstate compacts” to allow certain insurance plans to be sold across borders, but of course this isn’t true interstate competition — one assumes that regulators will only form compacts with states that have equally stringent regulations. Robust interstate competition is hardly a panacea, but it would expand the insurance options of individuals across the country. Granted, it would allow low-frills plans to flourish, but for some of us that is a feature and not a bug. 

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.