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The other problem? The patchwork nature of state regulations where there is no incentive for private insurers to control costs. In many states, profits (and admin expenses) are tied to a fixed percentage of premiums...so, in fact, if as an insurer, my profits are based directly on a fixed rate of 15% of premiums, there is a built in disincentive to lower premiums....lower premium means less profit....higher premiums means more profit.
It seems to me an insurance exchange of public and private that would encourage greater competition would likely reverse, at least to some degree, those current incentives to keep premiums rising.
IMO, there is no reason to abandon our current employer-based system. The issue is containing costs of those employer-based plans and expanding affordable coverage to those w/o ....and generally, greater competition not only accomplishes that, but it also stimulates greater innovation.[/QUOTE]
Profits for insurance companies are based on a premium to payout ratio, so if the cost of care went down then the insurance companies would be more willing to reduce premiums. so competition by itself will not bring down the cost to insureds.
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