Hospital Monopolies: The Biggest Driver of Health Costs That Nobody Talks About

Avik Roy | Forbes | August 22, 2011

The debate about health-care reform, on both the Left and the Right, revolves almost entirely around changing the way we pay for health care. Progressives advocate government-run, single-payer monopsonies, whereas conservatives advocate consumer choice among private insurers.

I agree that changing the way we buy health care is important—I once wrote a 6,400-word magazine article on the subject—but there’s an entire other side to that equation that we completely ignore: changing the way we sell health care.

For all the crap that insurers get for raising premiums, attacking insurers is the health-economics equivalent of shooting the messenger. Insurers are in the business of distributing to policyholders the cost of health care; that is, the prices that are charged by hospitals, doctors, and manufacturers for their services and products.