Tuesday, February 23, 2010

Health Insurance Antitrust Exemption and the sharing of Actuarial Data

I don't like health insurance companies having antitrust protection. At all. For the most part, I'm anti-market power (whether exerted by the government in the form of public option or overregulation, or by private corporations).
However, one strong benefit of insurer antitrust protection is that it gives health insurance companies a route to sharing their actuarial data, which is very important for competition. If companies knew that any competitor could just jump in, grab their actuarial data, and improve on it, they wouldn't make it available to anyone. This, ironically, would actually serve to WORSEN competition because it becomes an issue of "whoever has the best actuarial data gets all the customers in the long run, and can then negotiate lower rates and keep everyone out". So the sharing of actuarial data actually keeps the market more competitive, and eliminating the antitrust provision could make things worse (and no, the government can't reach a good conclusion by enforcing antitrust provisions when the co with the best data does force everyone else out, because in that case, the company will just do enough to comply with regulation, as opposed to continually improving operations.)
This actuarial data is also critical for any serious research into healthcare costs. I don't know, but I wouldn't be surprised, if this data was also used by Medicare.
Thus, if you're going to lift the antitrust exemption, you need to somehow force insurers to keep sharing their actuarial data. This should be simple enough policy, but it's important, and I guarantee Obama and the Dems in Congress are forgetting it.

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