We shouldn’t be surprised that health insurance premiums continue to rise at record rates — by 15-20 percent for many employers and their employees in 2016 alone. Between private insurance, Medicare and Medicaid, the number of insured Americans has grown dramatically to nearly 90 percent of the population. While more people than ever before are seeking health care services since the passage of Obamacare the supply of physicians, hospitals and outpatient treatment facilities has not kept pace.
It is a fundamental concept of economics that when demand is increased and supply is restricted, prices rise. But for more than 40 years, state and federal governments have used a heavy hand to limit the supply of new doctors and hospitals entering the market, as well as facility expansions and equipment purchases. To make true progress in bringing healthcare costs under control, we must put an end to this fool’s errand of limiting supply in the face of increasing demand. We need price competition.
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