Competition is healthy. When it is really allowed. When it is not, a fake competitive landscape costs people more.
Cable television service is high-priced, for example, because government regulates it instead of allowing true competition. It's also why you once had to pay a dollar a minute for a long-distance phone call and Californians today pay a fortune in utility costs compared to other states. Government monopolies only benefit the large companies that benefit from the system, like Comcast. It's why they support "net neutrality." If poor people are forced to have the highest speed access without competition, told that is a fundamental right, prices can never go down.
Government controls many aspects of modern life and when they do it is actually not better to have competition.
Case in point: the FTC is blocking a merger of two hospital systems in Pennsylvania because they claim it will reduce competition. Well, sure, but it won't create higher costs or reduced access. Costs will instead go down.
“Patients in the Philadelphia region have benefitted enormously from the competition between the Jefferson and Einstein systems,” said Ian Conner, Director of the FTC’s Bureau of Competition. “This merger would eliminate the competitive pressure that has driven quality improvements and lowered rates.
Benefited? How? Do consumers wear jerseys advertising their favorite hospital? Lowered rates? Where? In the last decade the average increase in health case costs due to government control has been 300 percent. A small fraction of people previously unable to get health insurance or Medicare now have access but the price for everyone has boomed. We still spend more per capita on health care than any other country but it's polarized - rich people from England, where they have nationalized health care, will travel here and pay but poor people are not better off. It's the best in the world, for those who can afford it.
That is due to government control, a lack of real competition, and why FTC is wrong in claiming that competition in government-controlled healthcare leads to lower costs. It causes higher ones, especially because, as FTC notes, oneupmanship caused these two hospital systems to "invest in new technologies." The spending and costs to consumer increases would be better known if health care providers were forced to reveal their costs as the White House wants done - and hospitals are lobbying hard to prevent.
If Hospital A goes and buys the latest greatest Health Woozel and puts it on a billboard advertising state-of-the-art care, then Hospital B must also buy the latest Health Woozel because patients see it and assume it's really important. The money for that device is being provided overwhelmingly by direct taxes and insurance companies, which is all of us in both cases. Paying for two Health Woozels is simply doubling the expense for everyone because neither hospital is suddenly going to lower its cost to compete. They have a very narrow, government-controlled system that they need to exploit, that is why a test that costs $5 to run will mean a bill of $1,000.
Actual competition would solve that but having two different hospital bureaucracies competing to charge someone that $1,000 does not help anyone. It only increases costs for both because they have redundant overhead. They want to merge because they can be more efficient, which is the only part of the discussion that makes sense.
Government blocking it claiming that two groups charging the same high prices plus duplicate overhead makes no sense at all.
When it comes to government-controlled anything, competition just costs us all more.
- Trump Administration Notice Of Proposed Rulemaking To Import Prescription Drugs From Canada
- Australian Economist Says Government Healthcare Increases Competition And Lowers Waiting Time
- New RAND Paper Argues Government Control Of Health Care Pricing Will Reduce Costs Better Than Competition
- Reduce College Tuition By Separating Funding For Research And Education
- In Your Dotage, Do You Want A Human Or Robot Helping You?