GUEST’S OPINION: Government should end its interference in health care markets

One of the worst effects of long-term government intervention in a particular market area is distortions and imbalances that can ultimately cause significant financial harm to consumers. Perhaps no clearer example of this exists than in the health care market.

Every American knows that health care is still very expensive. The average annual cost of health insurance for families has increased by more than 45% in the past 10 years, and nearly half of adults in this country report having difficulty paying their premiums. of health care. Unfortunately, few attempts have been made to identify and analyze the problems causing the costs, and most legislative efforts to date have been Band-Aid solutions, often exacerbating the problem.

Years of government intervention in the health care market – generally a well-intentioned effort to control central costs – have so distorted the market that conventional economic methods to set prices correctly respond. supply and demand is almost non-existent. Insurance policies, government-sponsored programs like Medicaid, and other policies have done nothing to reduce the cost of providing medical care—they simply shift the cost of that care around.

By separating the cost of the service point from the delivery of care, these well-intentioned strategies increase demand; if something is “free” – or more precisely, if someone pays a price – it will be used more. And although there is a certain degree of uncertainty up to the level of medical care – if you are sick or injured, you need treatment – more than the law holds the health care market. But as the demand increases, the person is always holding the bag. That someone, in the health care sector, is usually the health care providers.

The health insurance industry provides another clear example of how the government distorts the market excessively. Governments, at the federal and state levels, have been gradually adding to the list of insurance plans they are required by law to cover, and in most cases they are dealing with some form of price control over time. one. Health insurance is no longer “insurance” in the traditional sense, but simply a means of passing on costs.

As the number of insurance mandates and price controls has steadily increased, one major effect of this has been a major conflict of market power within the insurance industry. The two financial problems of having to cover large sums while surprisingly being prohibited from setting prices to reflect the new order have forced many insurance companies to leave the market or join forces to be able to accept the punishment.

This has caused the health insurance industry to contract to the point where it is controlled by a few large insurance companies.

This problem became worse after the passage of The Affordable Care Act, known as “Obamacare”. This act did not increase coverage obligations nationwide, but it also established a medical loss cap policy, which prevented insurers from paying more than 20% of their annual income and administrative costs. Large insurance companies can handle this change only because of their size; many smaller ones went out of business or merged with larger firms. The result? Forty-three percent of the health insurance market is now controlled by five companies.

Government policies have therefore created an oligopoly within the health insurance market, a level of consolidation that has given the insurance industry disproportionate pricing power. The situation is getting worse as the largest insurance companies are buying up physician groups, increasing the amount of control they have over the industry. This comes at a huge cost to hospitals and other health care providers, who are generally left holding the bag. The insurance industry also has unprecedented data on provider performance, particularly focusing on usage patterns and costs to their insured members. , often pay lip service to the quality, access, and complexity of psycho-social-relationships within primary care practices.

Meanwhile, the Biden/Harris administration continues to block hospital consolidation and necessary restructuring, combined with permanent reductions in Medicare and Medicaid payments to hospitals, which push these services to the limit, which has resulted in the closure of many hospitals around the country, especially. in rural and disadvantaged areas.

The pressure on hospitals is getting worse and may soon become a public health problem, bigger than the fentanyl crisis.

This imbalance is completely unnecessary and the product of bad public policy. There are no easy answers; An unregulated market cannot exist within the health care industry. But the first step to solving a problem is to know its root cause.

Jane Norton was the lieutenant governor of Colorado from 2003-2007. He served as executive director of the Colorado Department of Public Health and Environment from 1999-2002 and as a regional director at the US Department of Health and Human Services during the Ronald Reagan and George HW Bush administrations. . He also served as director of Intergovernmental and External Affairs for HHS during the Trump-Pence administration.

Jane Norton was Lt. Governor of Colorado from 2003-2007. He served as the Executive Director of the Colorado Department of Public Health and Environment from 1999-2002 and as a regional director in the US Department of Health and Human Services during the Ronald Reagan and George HW Bush administrations. He also served as the Director of Public and External Affairs for HHS during the Trump-Pence administration.