Wednesday, July 29, 2009

Health Care Competition is dead. Today.

First, a definition, from Wikipedia.
In economics, a monopsony (from Ancient Greek μόνος (monos) "single" + ὀψωνία (opsōnia) "purchase") is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only purchaser of a good or service, the "monopsonist" may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers.

Now we can get to the good stuff. Wanna know why the American Medical Association came out strongly for the health care public option, after decades of loudly shouting down any hint of government intervention in health care?

It's because of that definition up there. In pretty much every region in the country, one or two insurance companies have gotten so big that they set the prices for doctors, and the doctors are out of luck. If they don't like their compensation they can take their medical equipment and go home, because if the doctor isn't in the preferred patient network for the monopolist insurance company, no one will be their patient. Monopsony. It's good. If you are the monopsonist insurance company. Otherwise, not so good.

How does this work from a patient angle? Like buttah. The patient, unfortunately is the buttah. Or spread of choice. Quoting from the AMA report:
While large health insurers have posted very healthy profits since 2000, premiums for consumers have increased without a corresponding increase in benefits. In fact, during the same time period, consumers have faced increased deductibles,
co-payments and co-insurance. This has effectively reduced the scope of their health benefits coverage.
Got that? Once someone is big enough, they can charge whatever they want. If you are priced out of the marketplace and, say, die for lack of coverage (22,000 approx. last year), too bad suckah. Free market wins, dontcha know? The whole AMA report detailing the exact amount of (non-)competition in the US can be found here.

1 comment:

kerfuffler said...

I get really sick of overly simplistic 'free market' blather.

There is not nearly enough competition in the industry market because employers offer only a small array of choices, and many smaller companies are left off the menu. Since things have become so monopolistic, we need government involvement to increase choice.

It does not help that so many of our citizens are so ignorant that they cannot even seem to communicate through polls what they want, but rather are lead by the nose by people giving them meaningless catch phrases. My husband heard a guy at a town hall say, " The government just better keep it's hands out of my medicare."