Competition can improve services a company offers and lower the prices for consumers. Critics of Medicare have often pointed out that the plan has no competition so there is no way for people to lower the costs of the services provided by the company. Medicare Advantage Plans operate under different rules than the traditional government-sponsored program must. Competition between HMOs offering Medicare Advantage Plans results in better choices for the consumer, although there are laws about what companies can and cannot offer.
The Federal government may dictate what a company can offer under a Medicare Advantage plan, but it only dictates the minimum level of coverage. Companies can add parts or remove parts. They can also work the Medigap portion to get their customers better service or better rates. The policies offered by one company may differ from the policies offered by another, but this is for coverage above and beyond what standard Medicare will offer. Medicare Advantage Plans offered through larger companies will offer more doctors. Smaller companies may pride themselves on personalized service, but they may not have a large network. Shop around before selecting any one Medicare advantage plan.
The Federal Government limits how companies can compete with each other. A company cannot offer below a set level of service. Competition between insurance companies can also lead to unfair or fraudulent business practices, although this rarely occurs. Insurance salesmen paid on commission are more likely to bend or stretch the truth to get the commission when selling a policy, although insurance salesmen also operate under strict laws governing what they can and cannot do. For the consumer, the government involvement keeps prices higher than they might be otherwise, but competition does drive the prices for additional services down.