Health Care

Overview: The US government monopolized health care by restricting the supply of doctors through state medical licensing, hospitals through state Certificate of Need, drugs through federal IP laws favoring Big Pharma, and insurance through state mandates. (Holly 2013


(1) Health Care Sector Supply Chain

Hospital = provide medical/surgical/nursing care for sick/injured
Physician = diagnose/treat/prevent disease/injury
Pharmaceuticals = compound manufactured for medicinal drug
Nursing Homes = provide accommodations with health care for elderly
Medical Insurance = pays for medical expenses incurred by insured
Medical Equipment = aid in diagnosis/monitoring/treatment of disease/injury
Other Medical Professionals = Nurse, Dental, Therapists, etc.
Other = Other Retail Products, Research

(2) Regulations favoring monopolies

(A) Suppliers 

Supply of doctors and hospitals restricted based on unproven economic theory that “supply creates its own demand”

> supply of doctors and other health care professions restricted by state licensing laws
> supply of hospitals and other medical facilities restricted by state certificate of need laws in about 37 states 

Federal intellectual property laws restrict supply, create monopolies and inflate costs for drugs

> Drug companies claim they need monopoly profits obtained with generous patent/exclusivity protections to invest the money needed to develop new drugs
> 30 percent plus profit margin demanded may be higher than necessary
> US FDA approval process requires clinical trials that amount to about a billion dollars and 70% of the total costs of each drug
> costs of clinical trials inflated by high costs of US medical care by physicians, clinics and hospitals
> drug companies are trying to move testing to countries offering low-cost health care, but have been running into barriers including ethical questions.
> high costs of testing limiting development of nutraceuticals 

State mandates limit the supply of health insurance and create insurance company monopolies

> insurance profits regulated and have not raised the total cost of health care much since the net cost of insurance is only about 6% and most companies are leaving markets
> mandates may have led to cross subsidies between consumers 

Other preferential regulations:

> Government buyer programs (Medicare, Medicaid and Obamacare) have increased the demand for services (while supply is suppressed)
> Regulations encourage public and private buyers to promote consolidation among their providers
> Regulations encourage private buyer monopolies and cost shifting from big unto small business consumers

(B) Technologies

Health care industry failing to offer preventive care including diet

limiting treatments


(3) Monopolies are leading to economic problems

The lack of competition in the health care industry has brought skyrocketing costs (health care cost crisis), lower quality (malpractice crises), and a lack of innovation 

Obamacare has increased demand and costs even more (compared to the consumer price index), and threatens a new tax on small business 

National Federation of Independent Businesses (NFIB) has rated health care the top problem of the last twenty years  


(4) Economic problems can be solved by deregulation reform 

Vanderbilt University health care economist Frank Sloan explained the success of the most influential pro-regulation health care economist Uwe Reinhardt: “His theories are highly regarded because he is so clearly understood.  Unfortunately the evidence for them is not good; it is not bad either, it is just not there.  And it would be a shame to see federal policy set on such a poor, unscientific basis.”  

> abolish restrictive licensing laws that limit the supply of doctors
> increasing the supply of physicians from about 25 to at least 35 (per 10,000 population) that is common in most countries in continental Western Europe with less restrictive licensing and less than half the prices,
> similarly allowing an increase in the supply of other licensed health care professionals,
> abolishing state certificate of need laws that limit the supply of hospitals and other medical facilities,
> abolishing intellectual property laws passed since 1984 that are excessively limiting the supply of pharmaceuticals,
> abolishing state mandates on health insurance,
> abolishing Obamacare individual mandates, subsidies and exchanges,
> abolishing all regulations encouraging private buyer monopolies of big companies, making special deals with providers, and shifting costs unto small businesses, and
> abolishing regulations that encourage buyers like Medicare, Medicaid and big business buyer monopolies to promote consolidation among their providers.
> abolish state-sponsored rationing

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