Washington Is ‘Anti-Competitive’ in Healthcare
The Biden administration just announced the formation of another new federal agency tasked with encouraging competition in healthcare by rooting out “anti-competitive” practices. This is the height of irony, just like the proposed 2020 CoViD Disinformation Task Force. The federal government promised it would stop the spread of what it labelled disinformation and misinformation. Everyone knew the primary spreader of these falsehoods was Washington.
Today, Washington is repeating its 2020 tactic: accusing others of doing what they in fact actually do. Federal government, not commercial entities, has suppressed free market competition in healthcare. In economic terms, healthcare is both a monopoly – a single seller who dictates supply as well as prices – and a monopsony, a single buyer who controls demand for products and services. Such a system is the antithesis of a free market, that has millions of buyers and sellers.
Contrast free market auto sales with selling cars in a system like healthcare where there is central economic control.
In a free market for auto sales, many different commercial manufacturers produce various styles and sizes of automobiles with different technologies, features, colors, and prices. Although there can be some negotiation around price, ultimately the buyer pays an amount that is acceptable to seller. If the buyer offers to purchase a new Mercedes for $10,000, the seller simply refuses to sell. Some buyers want big, fancy high-priced cars and some want low-priced vehicles. Some people want good gas mileage while others want power and speed.
Free market auto sellers compete to satisfy the diverse demands of different buyers so buyers will spend their dollars purchasing cars from the successful competitor. Such competition drives prices down and keeps service as well quality high. The seller who over-prices his cars or produces unreliable, low-quality vehicles will quickly be out of business.
Envision an auto industry that operates the way healthcare does today. There would be many car sellers (like insurance companies) but they would have to sell vehicles (policies) with similar features, colors, and gas mileage dictated by federal regulations. That would make the auto industry a federal monopoly.
There would be 332 million car buyers, but none of these buyers would pay the sellers for their purchases – a third party does that, strictly following federal government payment guidelines (“allowable reimbursement schedules.”) Neither seller nor buyer decides the payment that seller receives – the federal government does. Price or charge is irrelevant: only payment matters. Both sides of this imaginary auto market – supply as well as demand – are controlled by Washington.
There is competition in a centrally controlled car market but not for buyers’ dollars. Sellers of automobiles compete for contracts to purchase tens of thousands of cars (patients) in bulk. Such competition does nothing to drive down the amount of money that buyers – taxpayers and premium payers – must pay in to the system. In fact, the amounts that buyers pay keeps going up even as quality keeps going down.
The purported intention of the new federal anti-competition portal and agency is to reduce costs by fostering competition. However, such federal action will not only fail to lower costs, it will actually increase healthcare spending.
Every time Washington legislates anything from clean water to fixed prices for medicines, it generates BARRCOME – bureaucracy, administration, rules, regulations, compliance, oversight, mandates, and enforcement. At present, 31 percent to more than 50 percent of all U.S. healthcare spending goes to BARRCOME. That is approximately $2 trillion taken away from medical care for Americans ... by the cancer in their own government.
Of course, the new “competition promoting” agency will require all elements of BARRCOME. More taxpayer healthcare dollars will be spent paying bureaucrats, administrators, rule writers, regulators, compliance officers, oversight auditors, and mandate enforcers, not to mention consultants, and lots of lawyers. So, even less money will be available to pay nurses, doctors, and therapists.
Every action taken by Washington supposedly intended to improve patient care, i.e., make care less expensive, and more accessible, has done precisely the opposite. More than fifty years of Washington improvinghealthcare –Medicare and Medicaid (both 1965), EMTALA (1986), HIPAA (1996), ACA (2010), IRA (Anti-inflation Reduction Act of 2022), etc. – have made healthcare worse than ever. After trillions of dollars and thousands of legislative acts, U.S. healthcare spending is truly “unsustainable” (Obama); average household healthcare costs in 2023 were $31,065; wait times to see a doctor can exceed four months; and more Americans succumb to death-by-queue.
Biden’s latest “fix” will only make healthcare less competitive and Americans less healthy, if that is possible.
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 12 books including multi-award winning, Curing the Cancer in U.S. Healthcare: StatesCare and Market-Based Medicine.
