More Playing Monopoly Under The Unaffordable Care Act: Obamacare Is An Old Fallacy

A physical therapist wrote the economic blogger, Mike “Mish” Shedlock, about another feature of Obamacare:

A cornerstone of ACA (Obamacare) is promotion of Accountable Care Organizations (ACOs) intended to be fully integrated systems, capable of taking patients through a complete continuum of care.

Allegedly, ACOs would reduce price.

ACOs (virtually the same as hospital consolidation) do not deliver on the promises.

Many anti-capitalists claim that the free market leads to cartels where a few big companies block competition and force consumers to pay high prices.

What many people don’t know is that, back in the late 1800s and early 1900s, people commonly called capitalists thought cartels were good for everyone and tried to create them using their private economic power to do so. Economist Murray Rothbard writes about the “progressive” era:

…business became increasingly competitive during the late 19th century, and that various big-business interests, led by the powerful financial house of J. P. Morgan and Company, tried desperately to establish successful cartels on the free market. The first wave of such cartels was in the first large-scale business — railroads. In every case, the attempt to increase profits — by cutting sales with a quota system — and thereby to raise prices or rates, collapsed quickly from internal competition within the cartel and from external competition by new competitors eager to undercut the cartel.

During the 1890s, in the new field of large-scale industrial corporations, big-business interests tried to establish high prices and reduced production via mergers, and again, in every case, the merger collapsed from the winds of new competition. In both sets of cartel attempts, J. P. Morgan and Company had taken the lead, and in both sets of cases, the market, hampered though it was by high protective-tariff walls, managed to nullify these attempts at voluntary cartelization.

It then became clear to these big-business interests that the only way to establish a cartelized economy, an economy that would ensure their continued economic dominance and high profits, would be to use the powers of government to establish and maintain cartels by coercion; in other words, to transform the economy from roughly laissez-faire to centralized, coordinated statism. But how could the American people, steeped in a long tradition of fierce opposition to government-imposed monopoly, go along with this program? How could the public’s consent to the New Order be engineered?

Fortunately for the cartelists, a solution to this vexing problem lay at hand. Monopoly could be put over in the name of opposition to monopoly! In that way, using the rhetoric beloved by Americans, the form of the political economy could be maintained, while the content could be totally reversed.

The government then created regulatory agencies like Federal Trade Commission and the Interstate Commerce Commission and state insurance commissions that effectively cartelized industries in the name of preventing monopoly.

Obamacare uses the same strategy. We are told that a few insurance companies were exploiting consumers, but the truth is that Obamacare is aimed at allowing fewer insurance companies and hospitals to exist. We’re solving a small problem (assuming there is one) by making that problem bigger.

Thus we now have headlines like, “Obamacare side effect: More hospitals expected to merge under Affordable Care Act.” Even the mainstream media realized this might cause problems.

A research paper funded by the Robert Wood Johnson Foundation last year on hospital consolidations across the country reached a blunt conclusion.

“Hospital consolidation generally results in higher prices,” according to the report by Martin Gaynor of Heinz College at Carnegie Mellon University and Robert Town of the Wharton School at University of Pennsylvania. “Ultimately, increases in health care costs (which are generally paid directly by insurers or self-insured employers) are passed on to health care consumers in the form of higher premiums, lower benefits and lower wages.”

See also the Wall Street Journal article extracts reproduced by the Heartland Institute, “Hospital consolidation increases costs, ObamaCare promotes it.”

But seriously, who could expect any other outcome? If laws were passed that made it economically necessary for all the grocery stores in your area to close down and consolidate into one giant store, do you think customers would get more choices, or that quality would improve, or that prices would sink? The monopoly would do exactly the opposite.

In addition to all the other problems with the Affordable Care Act, Obamacare’s consolidation strategy is guaranteed to degrade US health care.