When President Obama signed his health care plan into law, he promised it would foster “choice and competition.” Nine months later, Americans can count this as another Big Lie. Obamacare has instead reduced competition in the marketplace for health services.
The New York Times recently reported that Obamacare has spurred a wave of mergers among doctors, hospitals and other providers “eager to share costs and savings, and cash in on the incentives.” The Wall Street Journal noted a growing trend of hospitals merging into large regional networks and purchasing physician practices to lock up guaranteed sources of patients. Physicians are increasingly choosing to merge into large groups (or become salaried hospital employees) to lessen the costs of complying with the sweeping new law, such as requirements to adopt expensive electronic medical-record systems.
As a result of Obamacare, fewer physicians will work in the familiar two- to five-person small-group practices most Americans prefer. Instead, doctors will be increasingly driven into large, impersonal “accountable care organizations” - not to take better care of their patients, but simply to survive economically. This consolidation is not some “unintended consequence,” but rather an explicit goal, as White House health adviser Nancy-Ann DeParle acknowledged when praising Obamacare for encouraging “vertical organization of providers” and “physician employment by hospitals and aggregation into larger physician groups.”
According to the New York Times, many consumer advocates thus fear Obamacare will have the perverse effect of reducing competition and driving up costs.
Yet while Obamacare is suppressing genuine marketplace competition for medical services, it is also spurring a more sinister facsimile of competition - for political favors. Employers and insurers with sufficient political clout can save money by obtaining a much-coveted “waiver,” exempting them from onerous new insurance regulations. The 222 current recipients of such waivers include popular employers such as McDonald’s and Universal Orlando as well as the Service Employees Benefit Fund, which insures members of the Service Employees International Union (a major political supporter of the Obama administration). Because these waivers are granted at the discretion of the secretary of health and human services, they create easy opportunities for political favoritism and corruption.
Nor will the political favor-seeking be limited to insurance waivers. If the Obamacare individual insurance mandate survives current legal challenges, it will also spur a lobbying frenzy from special-interest groups seeking to include their pet benefits in the mandatory insurance package Americans must purchase.
Such lobbying has already occurred in Massachusetts, which imposed a similar insurance mandate in 2006. According to Cato Institute analyst Michael Cannon, Massachusetts providers have successfully lobbied to include 16 new benefits in the mandatory package (including lay midwives, orthotics and drug-abuse treatment) - and the state legislature is considering dozens more. Massachusetts residents must therefore purchase insurance on terms set by bureaucrats and lobbyists, rather than their actual individual needs. Obamacare would encourage special interests to similarly “compete” at the national level to force ordinary Americans to pay money they cannot afford for benefits they do not need to subsidize those with the greatest political “pull.”
Genuine market competition benefits consumers by allowing them to freely trade with producers according to their best judgment for their mutual benefit. To promote such competition in health care, the government should not impose more regulations, but rather repeal existing regulations and free providers to compete to offer patients the best value for their money. In the freest (i.e., least regulated) sectors of medicine such as laser eye surgery and cosmetic surgery, practitioners succeed by competing in precisely this fashion. Over time, the result has been rising quality and falling prices - something we take for granted with computers and cell phones. This can and should be the norm in all of health care.
Fortunately, the newly elected Republican majority in the House of Representatives appears ready to challenge Obamacare. Americans should let Congress know what kind of health care competition we want. Do we want free-market reforms that will encourage providers to compete to offer better medical services at lower prices? Or do we want a system that encourages special-interest groups to compete for political favors at the expense of ordinary Americans? The choice is ours.
Dr. Paul Hsieh is a member of the Colorado chapter of Docs4PatientCare and co-founder of Freedom and Individual Rights in Medicine.