Why Are Health Insurance Companies More Untouchable Than For-Profit Hospitals?

Have health insurance companies in America become so coddled they’ve forgotten what it means to compete for business? Are they so reliant on government intervention, price-fixing, and captive clients that they’ve lost the will to negotiate? Are they aware of the decline and steady closure of America’s urban hospitals, and their role in that process? Do they care? Or, have they become so blinded by greed, sloth, and arrogance that they don’t even notice?

These are just some of the questions you might be asking if you’re an urban-dwelling health insurance consumer, or if you’ve been following the insurance industry’s media war to crush one of the few recent success stories in U.S. healthcare: the for-profit hospital model.

It has been an aggressive campaign, featuring lots of sympathetic ink devoted to the insurance industry and its difficulty in navigating an obstacle with which it is not too familiar: resistance to its artificially low reimbursement rates for medical treatments to customers. Although all are quick to assail hospitals’ profit motive, most stories seem reluctant to acknowledge that insurance companies must also adhere to fundamental economics. The less they pay, the more they keep.

The battleground over for-profit hospitals has largely been confined to the state of New Jersey – and its powerful New York media market – which has seen the shuttering of nearly 40 urban hospitals over the past decade (for national perspective, a study by the Pittsburgh Post-Gazette found that between 1990-2010, America’s 52 largest cities experienced 201 hospital closures).