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But No One Shops for Health Care

October 2, 2007, 9:06 am

For a while, I have been trying to highlight that the real problem with health care is that consumers who receive the service do not have any incentive to shop for the best price or to make trade offs on marginal procedures based on price.  The only people who have any incentive to shop are 1) people without insurance and 2) people with high deductibles (like me).  Politicians are trying to eliminate the former group, even if they don't want insurance, and programs like Romney's in Massachusetts actually ban high deductible insurance.

Now, Obama is worried about anti-trust:

The consequences of lax enforcement for consumers are clear. Take
health care, for example. There have been over 400 health care mergers
in the last 10 years. The American Medical Association reports that 95%
of insurance markets in the United States are now highly concentrated
and the number of insurers has fallen by just under 20% since 2000.
These changes were supposed to make the industry more efficient, but
instead premiums have skyrocketed, increasing over 87 percent over the
past six years. As president, I will direct my administration to
reinvigorate antitrust enforcement. It will step up review of merger
activity and take effective action to stop or restructure those mergers
that are likely to harm consumer welfare, while quickly clearing those
that do not.

How can these mergers harm consumers when consumers don't shop for the service and don't care about price in the first place?  Candidates like Obama and Clinton are threatening to create single payer systems that use monopsony power combined presumably with the coercive power of government to hammer suppliers.  Is it any wonder that they are joining together to try to gain some sort of bargaining position for themselves?  In the context of what Obama wants to do with health care buying, this can be thought of more as unionizing than merging.

By the way, does anyone else note the irony of Obama, who wants to create a single supplier for health care (the US Government) lamenting concentration in the health care field?

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Category: Health Care
  • Zach

    "By the way, does anyone else note the irony of Obama, who wants to create a single supplier for health care (the US Government) lamenting concentration in the health care field?"

    I thought I was the only one who noticed this of any of the communized health care candidates.

  • Thibodeaux

    It's like you keep pointing out with NOW: lots of people have a blind spot when it comes to "health care," and can't see that they're holding mutually contradictory beliefs in their heads. There's a word for that...

  • http://www.skipoliva.com Skip Oliva

    Obama doesn't even know what he's talking about on the antitrust front. There has been rabid enforcement of the antitrust laws in the healthcare sector--against physicians. The moment any group of doctors rejects an insurance company's contract offer, the doctors are considered guilty of "price fixing" by the FTC and DOJ. There have been over 30 cases in the past for years of physician groups--some with as few as six members--facing antitrust probes for "depriving" the largest insurance companies in America of the "benefits of competition."

    Translation: The FTC and DOJ want insurers paying doctors rates that are in line with the federal price controls for Medicare and Medicaid. If there's any hint the doctors want to set prices independent of those price controls, they must be stopped, otherwise physicians might make enough from the insurers to forego Medicare/Medicaid patients altogether.

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