California's 'Competitive' Market

http://www.nytimes.com/2010/02/16/health/policy/16anthem.html?pagewanted=2&fta=y
"In statements and letters, Anthem and WellPoint have explained what the industry calls a recessionary death spiral: as unemployment and declining wages prompt healthy people to drop their insurance, the remaining risk pool becomes sicker and more expensive to insure, which in turn forces up prices and pushes more people out of the market.
A study released this week found that the five largest health insurance companies collectively lost 2.7 million customers last year."
"The death spiral "highlights why we need sustainable health care reform to manage the steadily rising costs of hospitals, drugs and doctors," Anthem, which is based in Los Angeles, said in a statement."
The article notes that many of the 13 million Americans who buy insurance individually rather than through employers cannot shop for a better deal because medical conditions like high cholesterol and glaucoma that would probably disqualify them with other carriers.
"Once accepted by an insurer, consumers cannot be dropped for medical reasons. But in California, where Anthem controls more than half of the individual market, regulators have little power to prevent insurers from raising individual rates as high as the market will bear. That often forces consumers to move to less-generous policies with higher deductibles in order to hold down their costs."

The 'less generous' policies are the ones we should all be moving to. That would reduce 'health care costs' by changing the incentives that drive high cost behaviors.

Does this article describe what Krugman terms a 'competitive' marketplace?