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Thursday, April 21, 2016

Why healthcare costs have increased since 2010

So large hospital groups have succeeded in beating out the competition by supporting big government, which in turn creates laws that create regulations that smaller hospitals cannot afford. This, in turn, causes their competitors to either close their doors, or they have no choice but to merge with the larger groups. This, in turn, has resulted in higher healthcare costs.

This is contrary to the promise that healthcare costs would go down under Obamacare. Yet Obamacare has made it easier to merge, and easier to charge high prices. In fact, Obamacare almost encourages it through incentives. Check out here some quotes from

This has had a great impact on the healthcare industry.  This is how larger hospitals have beat out their competition -- gobbled up the competition -- without even having a better product, or regardless of having a better product.

Here's a quote from Forbes:
The average day spent in a U.S. hospital costs five times as much as it does in other industrialized countries. That’s not because U.S. hospitals use higher technology or better care. It’s because they charge more for the same technology and the same care. Because they can get away with it.
Making matters worse, as I noted above, is that Obamacare encourages hospitals to merge, giving hospitals an even greater incentive to charge higher prices. This is due to less competition. According to Forbes:
The next thing Obamacare does is it encourages hospitals to merge, thereby giving hospitals even more market power to charge even higher prices. A study by Jamie Robinson of the University of California found that highly concentrated hospital markets–where one or two hospitals controlled most of the patient volume—hospitals charged an average of 41 percent more for common procedures than they did in more competitive markets.
Furthermore, as noted by Forbes, since Obamacare there has been a spike in hospital mergers. Forbes noted:
The spike in hospital mergers is being driven by two things. The first is that Obamacare expands government-sponsored insurance, like Medicaid. Government insurance pays less than private insurance pays, so hospitals seek to merge so they can gain more leverage on private insurers to charge whatever they want. In 1993, for example, Harvard’s two main hospitals—Massachusetts General and Brigham and Women’s—merged, and immediately began jacking up prices to the privately insured and uninsured populations.
The second is that Obamacare creates a government program, called Accountable Care Organizations, whose explicit goal is to encourage hospitals to consolidate the provider industry, thereby giving them more leverage to charge higher prices. In 2011, a Federal Trade Commissioner called attention to this problem, noting that “the net result” of ACOs “may therefore be higher costs and lower quality health care.”
Some say that the best way to bring down prices is for Obamacare to add price controls. Although all that would do is cause hospitals to stop offering services that are under priced offer procedures that are over priced.

The real resolution to this problem is to try increasing competition, something that has never been tried in healthcare. This would entail breaking up the large hospital groups with antitrust proceedings, loosening up restrictions on hospitals, repealing Obamacare, and allowing the sale of health insurance and hospital services across state lines. This would get hospitals and insurance groups to compete with one another, and the ones that offered the best quality service at the lowest price would prevail.

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