Healthcare Is 99.84 Percent Consolidated
Last week, the Biden administration “called out ... consolidation in healthcare markets, saying it too often leads to higher costs, worse quality and reduced care access, especially in rural areas.” President Biden has set a new record for the use of irony.
In economic terms, healthcare is both a monopoly and monopsony. Most people know about the former but few recognize the latter. A monopoly is a market where one seller controls the market and can set prices. That of course applies to Washington’s regulatory control of healthcare. A monopsony is a market where one buyer determines what is sold, whether services or goods. Again, that describes Washington’s insurance rules for health benefits. Healthcare, as both federal monopoly and monopsony, is the ultimate in market consolidation. There is one buyer and one seller: Washington.
Biden asserts that, “consolidation has also led to a rapid decline in independent physician practices.” This is true. Patients are not the buyers of care services. Health plans, who control the money lump doctors into huge provider lists and pay them amounts that are contracted with insurance companies. Consolidation has cut the solo practitioner out of the equation.
Third-party insurance payment structure is how consolidation has taken over healthcare. For 170 million Americans, Washington controls their healthcare directly through Medicare, Medicaid/CHIP, Tricare, and the VA. For 134 million privately insured Americans, federal insurance regulations dictate their care. For 29 million uninsured Americans, Washington dictates care through EMTALA (Emergency Medical Transport and Labor Act of 1986).
The ultimate “consolidator” of healthcare, the single corporate entity in charge – is the federal government.
“The White House said it would launch a cross-government public inquiry into corporate greed in healthcare.” Greed can be defined as the intense, selfish desire for money. That describes the federal government in healthcare.
The primary function of any healthcare system is to provide medical care. Naturally, most of the money spent on healthcare, the system, should pay for health ... care, the service. Washington spent $4.3 trillion in 2022 on the U.S. healthcare system, amount greater than the entire GDP of Germany. Roughly half, $2 trillion, Washington paid to itself, paying not for care but for BARRCOME (bureaucracy, administration, rules, regulations, compliance, oversight, mandates, enforcement). What was left over was made available to pay for patient care. That is extreme federal “corporate” greed.
Biden intends to have, “HHS [Health and Human Services] ... appoint a Chief Competition Officer and DOJ's Antitrust Division, and FTC will name Counsels for Health Care to lead these efforts.” This is just what healthcare needs: more spending on BARRCOME, diverting even more dollars away from patient care! Consider all the bureaucrats, not patients or doctors, who control healthcare. They work for CMS, HHS, IRS, FDA, CDC, NIH, OSHA, NRLB, etc. Look up the organizational chart of ACA. Each one of the boxes has multiple sub-boxes. Each sub-box is filled with titles of healthcare workers who never see or touch a patient, all of whom must be paid. That money is diverted from people who provide care to people who don’t. Such “bureaucratic diversion” is precisely what Obama did to pay for the ACA. And Biden wants to add even more BARRCOME!
Greed can also be the intense, selfish desire for power. This precisely describes what Washington has done in healthcare starting in 1965. With each new program touted to benefit the American people – Medicare, Medicaid, EMTALA, HIPAA, ACA, most recently Biden’s Anti-Inflation Act of 2022 – Washington has taken control of one more component of healthcare. Whether spending decisions or medical choices, ultimately, Federal Father (thinks he) knows best, is responsible for the children (the American public) and must (therefore) make all health decisions for us.
Federal greed for power and money satisfied by consolidation.
Finally, Biden says that consolidation “reduced care access, especially in rural areas,” another true statement. The ACA increased wait times to see a primary care physician to a medically unconscionable four months. Who is responsible for this reduced access? In 1965, Texas had 310 single source of care, small rural hospitals. Today there are less than 160 and more keep closing. They cannot afford to pay their nurses, doctors, or electric bills because Washington’s EMTALA forces them to provide care for no payment.
If Washington investigates the causes and effects of consolidation in healthcare, will Biden investigate himself?
Healthcare is not 100 percent consolidated. There is a tiny bubble of free market healthcare called direct-pay, cash-only, or “concierge” practice that represents 0.16 percent of healthcare spending. Providers in this bubble offer prompt, quality, compassionate, knowing-each-patient-by-name medical care for a small fraction of insurance costs. Fortunately for patients, the bubble is growing.
Deane Waldman, M.D., MBA is Professor Emeritus of Pediatrics, Pathology, and Decision Science; former Director of the Center for Healthcare Policy at Texas Public Policy Foundation; former Director, New Mexico Health Insurance Exchange; and author of the multi-award winning book Curing the Cancer in U.S. Healthcare: StatesCare and Market-Based Medicine.
