Wouldn’t a not-for-profit system work better, at least with respect to hospitals?

Anyone wondering how the health insurance companies have been increasing their profits at such a rapid rate should read this recent article from BusinessWeek. It appears that large health insurers completely dominate the market in many states.

The insurance industry is up in arms over congressional proposals to create a publicly financed competitor in an effort to bring down health-care costs. That may be because it doesn’t have to face much in the way of competition now: Most regions of the U.S. are dominated by just one or two health insurers.

Each year the American Medical Assn. (AMA) surveys the commercial health-insurance landscape and finds little if any competition. Its latest report says that, out of 314 metropolitan markets, 94% are controlled by one or two companies, or fewer. In 15 states, one insurer has 50% or more of the entire market.

Such market concentration has become a potent argument for supporters of a public insurer, President Barack Obama among them. With no need to generate profits, a public plan could offer lower premiums, thus bringing competitive pressure to bear on the private insurers to do the same.

Ezra Klein makes a similar point in the Washington Post.

In the modern health-care system, there is no higher power than the insurance market. And the insurers who populate that market have grown all the stronger. The Justice Department judges an industry “highly concentrated” if a single company controls more than 42 percent of the market. By that definition, 94 percent of statewide insurance markets are highly concentrated. A recent study by the advocacy organization Health Care for America Now showed that in Indiana, WellPoint controls 60 percent of the insurance market; in Iowa, Wellmark accounts for 71 percent; and in Alabama, Blue Cross/Blue Shield holds 83 percent. In the past 13 years, there have been more than 400 corporate mergers involving health insurers.

Economics textbooks tell us that concentrated markets reduce the competitive behavior that benefits consumers and lead to outsize profits for the dominant firms. Predictably, health-care premiums shot up more than 90 percent between 2000 and 2007, while the profits of the 10 largest insurers increased 428 percent over the same period.

We have a system that is not sustainable. This isn’t capitalism – instead we have several large insurance companies practically stealing money from American taxpayers.

Right now, President Obama is trying hard to get a bill with the help of all the major players, including the insurance companies. Therefore we’ve seen him go after costs and premiums, but he has not taken on the insurance companies in a direct manner.

If the current effort at reform fails or stalls, expect to see a full-throttled attack against these companies that informs the American people just how much money they are making and the tactics they are using to deny coverage to pad profits.

Paul Krugman has been tough on Barack Obama at times, but he’s behind him on health care. Today he mocks the media for focusing on everything but the actual policy issues.

The talking heads on cable TV panned President Obama’s Wednesday press conference. You see, he didn’t offer a lot of folksy anecdotes.

Shame on them. The health care system is in crisis. The fate of America’s middle class hangs in the balance. And there on our TVs was a president with an impressive command of the issues, who truly understands the stakes.

Mr. Obama was especially good when he talked about controlling medical costs. And there’s a crucial lesson there — namely, that when it comes to reforming health care, compassion and cost-effectiveness go hand in hand.

Of course, the policy issues are too boring for our brain-dead media when compared to all the drama surrounding the process.

Krugman also focused on one of the most important policy developments over the past several days.

I don’t know how many people understand the significance of Mr. Obama’s proposal to give MedPAC, the expert advisory board to Medicare, real power. But it’s a major step toward reducing the useless spending — the proliferation of procedures with no medical benefits — that bloats American health care costs.

And both the Obama administration and Congressional Democrats have also been emphasizing the importance of “comparative effectiveness research” — seeing which medical procedures actually work.

So the Obama administration’s commitment to health care for all goes along with an unprecedented willingness to get serious about spending health care dollars wisely. And that’s part of a broader pattern.

Many health care experts believe that one main reason we spend far more on health than any other advanced nation, without better health outcomes, is the fee-for-service system in which hospitals and doctors are paid for procedures, not results. As the president said Wednesday, this creates an incentive for health providers to do more tests, more operations, and so on, whether or not these procedures actually help patients.

MedPAC was originally created by Republicans to look for ways to cut costs in Medicare and Medicaid, so you would think they would be openly in favor of this development of giving this panel real power, but most Republicans are too busy trying to kill the reform effort.

Barack Obama has always excelled when it was time to give a big speech, and he delivered again tonight. He explained the crisis we face, along with his plans to address it. Some of mentioned that Obama needed to offer some hope, and that of course was an easy task for Obama.

But, he took things much further. he laid down the gauntlet on his agenda. He made it clear that he was committed to addressing energy, health care and education – this year!

One of the interesting details was his reference to finding $2 trillion of spending cuts over the next 10 years that he wants to cut. He mentioned farm subsidies for large agri-business and “cold-war” weapons systems as necessary cuts. The political fights here will be significant, but he made it clear he was willing to make serious cuts.

If you’re interested in a closer study of Obama’s speech and the importance of his rhetoric, dig around the web. A lot of sites are popping up about this subject and you can always find good discount printing options to get copies of his speeches for personal reference.

I’m listening to Obama’s remarks as he closes his Fiscal Responsibility Summit, and it’s rather stunning to see an interactive session that includes the President, and other leaders of our government like John McCain and Steny Hoyer. It was particularly interesting to hear John McCain speak and be supportive of the Obama Administration’s goal to get control of the military procurement process.

When looking at the list of attendees, it seems clear that Obama is serious about his goal to address the serious fiscal issues facing this nation. We are wasting billions of dollars with an inefficient health care system and wasteful weapons programs.

There seems to be some consensus on the potential of cutting corporate tax rates in exchange for closing loopholes.

Coupled with Obama’s aggressive, and honest, budget proposal, this might help generate some serious momentum for fiscal discipline.