Local Blogs

By Tom Cushing

Since When are Competition and Lower Medical Costs a Bad Thing?

Uploaded: Feb 7, 2014

I am writing in response to brother blogger Tim's recent description of developments in the East Bay health care market. I'll admit to some uncertainty about the piece, which contains many relatively disconnected facts, conveys an extended commercial for one established competitor, employs language that suggests opposition to these developments, and ultimately hopes for unspecified legislative change -- because if Anything touches on ObamaCare, then it must be bad.

Let's start with the language of "invasion" and "roiling" the local market that is already "challenging." Sounds like a nefarious threat to the proper status quo, right? But Tim's an established free marketeer, and isn't that what competition always does: invade and roil? Or does it matter whose ox is being (b)roiled?

Later, the text speaks of having to "cope" with "the demands of ObamaCare." What demands, you might ask? Apparently, there is a belief that the Great Evil (a/k/a the ACA) "will reduce reimbursements to hospitals." Except that the government does not reimburse hospitals under the ACA, insurance companies do. ObamaCare is distinctly Not a single-payor system, like Medicare is – it simply drives more customers in the direction of insurers by requiring access. Make no mistake – the dominant party in the carnal dance of medical economics is the hospitals – as the insurers accommodate and enable their opaque pricing. And I don't think I have to tell you who's really been getting, ahem, scrod in the process.

Further, let's assume the ACA does mystically exert downward pressure on health care costs – how (oh, How!) would that be that a bad thing? The phenomenon that is Actually moderating such increases, and may eventually bring down medical costs, is price transparency that facilitates comparison shopping. ObamaCare is not intended to address that problem directly, but others – notably large benefits providers like CalPERS and big companies – are just now starting to find and flex their free market buying power. And efficient health care providers are beginning to recognize their competitive advantage and go along. THAT's the competition that will help this mammoth market work the way it's supposed-to, to the benefit of consumers.

The blog then launches into an extended promotion of all things ValleyCare, including its recently deposed CEO. I guess that would be okay, if equal time was given to the new entrant in these 'stakes, but it's not. It's in the nature of a commercial – possibly useful to newcomers, but hardly fair-and-balanced. If the point is that we don't need new providers here – well, that's a decision that capitalism leaves to the free market to decide. Unless health care is somehow different?

The final paragraph is notable for two things. First, the language slant continues, as everyone "strives" to "adjust to the 'demands' of ObamaCare." Again, if true – how would that be bad or unusual? And don't consumers – all of us – gain from such striving in every market setting? Does the blog really want to side with hospitals here, and against users that every market is built to serve? Does it want to choose that side when the evidence is so clear that the market has been rigged to serve the hospitals' remarkably profitable interests? Does it mean nothing that Americans spend double – Double -- for the same health outcomes as the rest of the First World?

Second, the blog calls for completely unspecified "solutions" based on "changes" in DC. Solutions for whom (as above)? If you want to serve consumers, the obvious change is single payor. Otherwise, much greater regulation of business practices and mergers would be required to rein-in the current market abuses by big hospitals, especially as regards pricing. On the other hand, if you want to serve those hospitals' interests, then frankly, ObamaCare helps-out by smoothing and rationalizing the payment stream from several million new or formerly free users. Again, it's not clear whose side the blog takes, but there is a conflict of the respective interests -- it can't serve them all.

Moreover, I am tired of serial miss-characterizations of the ACA to be a whipping-boy for Everything That's Bad. It may end-up being more costly than the non-partisan Congressional Budget Office has projected (as is off-point here, but will surely be pointed-out anyway). Or it may not be – we'll see eventually. But you cannot responsibly just trot-it-out to explain every perceived tribulation of your favorite hospital, as if that was so obvious as to not require either logic or explanation. Its repeal may be the continuing nocturnal fantasy of the Right, but efforts in that direction are bound to be about as productive. You may not like it – but let's at least bring a modicum of accuracy to the objections.

As to the Tri-Valley specifically, come on in, Muir – the water, what there is of it, is fine.