Saturday, January 30th, 2016
When one applies basic economic principles to evaluating the state of Minnesota and US healthcare competition, there is only a faint pulse. We’ve restricted competition for dollars and patients in the VA system to single payer and single provider, taxpayer funded MN state psychiatric hospitals are in crisis, and Minnesota’s consolidating insurance-provider conglomerates make lots of their “nonprofit” money administering managed care Medicaid by restricting “provider” hospital and physician networks.
Economics 101 predicts negative effect on costs (higher), quality (lower), and access to services (restricted) when supply and demand of heathcare goods and services are arbitrarily controlled. Monopolies confine supply of a healthcare good or service to one source, oligopolies to a few. And on the demand side, monopsonies confine demand to one “customer” (the state hospital system), and oligopsonies direct monies to a few large Minnesota healthplans and hospital-clinic organizations.
Result: Dissatisfied recipients of government entitlement programs, soaring private sector insurance premiums and out-of-pocket deductibles, and mounting demands for higher taxes from Minnesota citizens.
Patients until now have not usually lobbied the Minnesota legislature unless they’re in a group wanting money for a particular class of illnesses (including medical cannabis).
Markets depend on empowering consumers with transparent prices allowing them to sort, compare and make personalized healthcare choices among competing “providers.” How much real choice and control do patients and families have now in MNSure? Medicaid? and Medicare? Minnesota physicians and clinics now have no incentive to compete for patients based on care quality and price. As economist John Goodman (above) puts it, our healthcare system is truly priceless.