The Baltimore Sun reported last week on the plight of small employers in the Baltimore area, and the cost of health insurance. Without market power, small businesses have a difficult time providing health insurance to employees. Still, it’s a very popular fringe benefit, and most people believe having health insurance indispensable. That is, until they can’t afford it.
I commented on this last month. Small businesses not only have smaller profit margins, often, but also have less favorable access to affordable health coverage. The new article by Jay Hancock cites this sobering statistic: “in metro Baltimore, … CareFirst and UnitedHealth control nearly 80 percent of the trade. That’s not a market. That’s oligopoly – market failure.” Anecdotally, the article notes that the number of companies offering health insurance for small businesses has diminished, and the rate of increase is in double digits annually, far higher than inflation.
The market conditions create a prescription for failure. I’m dismayed that the public health insurance option appears to be dying in Congress.