Do carriers promote monopolies?

The U.S. health care finance system may be such a mess partly because health insurers have incentives to support provider monopolies.

Barak Richman testified on Capitol Hill Thursday that U.S. antitrust regulators have let hospitals — including nonprofit hospitals — use mergers, acquisitions and regulatory moats to buy and crush competitors and jack up prices.

Health insurers have been making the situation worse, by treating the big hospitals too gently and letting them charge far higher prices than even normal, “textbook monopolies” would be expected to charge, Richman said.

“Insurers all-too-often become co-conspirators with provider monopolists, agreeing to exclusive agreements that protect both themselves and monopolists but unforgivingly gouge consumers,” Richman said.

In some cases, insurers have been weak purchasers because they know consumers want “the very best,” but, in some cases, they are taking advantage of consumers’ lack of awareness of how much lower the cost of health care could be, Richman said.

Richman, a Duke University economist, talked about the state of competition in the health care market at a House Judiciary subcommittee hearing on the effects of the Patient Protection and Affordable Care Act (PPACA) on health care competition.

PPACA could help improve health care competition by giving consumers more information about what health care really costs and giving insurers a chance to come up with creative new products, Richman said.

But, by adding red tape, PPACA also could strangle any efforts to reconfigure the system, Richman said.

Other witnesses defended both providers and carriers.