The Wrong Kind of Competition

The November 20, 2010 New York Times notes that ObamaCare will lead to a decrease in market competition for medical services and prices. Here's an excerpt from "Consumer Risks Feared as Health Law Spurs Mergers":

Now, eight months into the new law there is a growing frenzy of mergers involving hospitals, clinics and doctor groups eager to share costs and savings, and cash in on the incentives.

They, in turn, have deployed a small army of lawyers and lobbyists trying to persuade the Obama administration to relax or waive a body of older laws intended to thwart health care monopolies, and to protect against shoddy care and fraudulent billing of patients or Medicare.

Consumer advocates fear that the health care law could worsen some of the very problems it was meant to solve -- by reducing competition, driving up costs and creating incentives for doctors and hospitals to stint on care, in order to retain their cost-saving bonuses.

But we'll also see a different kind of competition -- for political favors.

Those with sufficient political clout will get coveted waivers from onerous ObamaCare insurance rules.

Furthermore, once mandatory insurance is imposed nationally, we can expect a frenzy of special interest groups seeking to include their own pet benefits in the mandatory package that all Americans must purchase.

This already happened in Massachusetts after that state passed its "universal health care" system in 2006, based on a similar system of mandatory insurance:

Since 2006, providers have successfully lobbied to include 16 new benefits in the mandatory package (including lay midwives, orthotics, and drug-abuse treatment), and the state legislature is considering 70 more.

These mandatory benefits raise prices for everyone to benefit the politically-favored few. Soon, the other 49 states will experience the pain that Massachusetts residents must now endure.

Even self-described liberal Democrat Morris Panner notes the problem in his November 19, 2010 Washington Post OpEd, "Strangling innovation with red tape":

We are creating so much regulation -- over tax policy, health care, financial activity -- that smart people have figured out that they can get rich faster and more easily by manipulating rules on behalf of existing corporations than by creating net new activity and wealth. Gamesmanship pays better than entrepreneurship.

Instead of fostering competition for improved medical services at lower prices (which is the norm under a free market), ObamaCare will suppress that kind of competition -- and instead spur competition in the realm of political "pull", cronyism, and gamesmanship.

Is this the kind of competition we want?

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