MONOPOLIES CAN NOT EXIST IN A FREE MARKET!
...except in very rare instances and only in the very short term...
If a monopoly arises in a certain market in an economy, the rate of return on investment will be abnormally high, leading to a huge influx of investment money into that market and the creation of competitors to benefit from those abnormally high rates of return which will serve to drive the rate of profit down to normal levels and break the monopoly.
Even in a monopoly, the laws of supply and demand still determine price. A monopoly gives that business the ability to control supply, but they do not control demand. while they can manipulate supply to increase their profit margin, demand is beyond their control. Consequently the laws of supply and demand still set the price if nothing else then through the competition of other options due to increased opportunity costs.
Here is an example based on the (false) assumption of a monopoly of in the health insurance industry. If that business with the monopoly increases the average price of premiums per month from, say $250 to $500, it would be cheaper for me to cancel my insurance and simply put that $250 I would normally pay to the insurance company every month into a savings account for medical emergencies; a Health Care Savings Account (HSA). It would keep that other $250 a month in my pocket and I would avoid a deductible in the case of a medical emergency. So that business has an interest in keeping prices relatively reasonable so I don't go with the competing option of a HSA do to a lower opportunity cost; indirect competition still influences prices.
To claim that we have a monopoly in the health insurance industry today is absurd at face value. We have around 1700 providers in the country today. The claim that we have a monopoly of 1700 businesses is contradictory; and oxymoron.
You also cannot say that we have an oligopoly in this country today. An oligopoly is, "a market form in which a market or industry is dominated by a small number of sellers". 1700 providers today is hardly a "small number of sellers".
The fact is that monopolies (or oligopolies) cannot exist unless government in some way props them up (corporatism) and that is exactly what is happening. There is a federal ban on purchasing insurance across state lines. This has the effect of creating 50 separate oligopolies across the country. For instance, while there are 1700 providers across the country, in California, you can only choose from 6.
Also, there is a federal tax benefit that businesses have if they purchase coverage for their employees. This has the effect of hiding the costs of insurance and of health care in general from the general population which allows those few providers to increase their profits and go unnoticed for a very long time.
Then there are the Federal oligopolies; Medicare, Medicaid, the VA, SCHIP, the two largest by far are Medicare and Medicaid. Their arbitrary price controls (in the form of reimbursement rates that do not cover even half of the costs of the procedures at times) as well as their slow payout leads to increased costs of treatment for non medicare or medicaid patients to make up for the inadequate reimbursements. In short, Medicare and Medicaid serve as an entity that "dominates" the market; they are, by definition, an oligopoly.
You also have this article that Johnny was kind enough to point out in this thread that points out how Medical Boards have effectively Nationalized health care by getting each state to enact, "a Medical Practice Act which created a board of medical examiners with police powers to enforce their decisions"; basically, corporatism. Again.
Combine these facts with the massive amount of regulations and frivolous litigation and you can see why we have such high costs in the health care industry.
Government involvement has created and sustained oligopolies across the country through corporatism. Now, the reform being pushed through congress aims to double down on corporatism and further stifle the free market. However, if those restrictions by the government that prop up the oligopolies were removed, those oligopolies (besides Medicare and Medicaid) would disappear almost overnight. We need to end corporatism in this country, not amplify it.
Here are a couple more good articles from the same website as Johnny's article.
...except in very rare instances and only in the very short term...
If a monopoly arises in a certain market in an economy, the rate of return on investment will be abnormally high, leading to a huge influx of investment money into that market and the creation of competitors to benefit from those abnormally high rates of return which will serve to drive the rate of profit down to normal levels and break the monopoly.
Even in a monopoly, the laws of supply and demand still determine price. A monopoly gives that business the ability to control supply, but they do not control demand. while they can manipulate supply to increase their profit margin, demand is beyond their control. Consequently the laws of supply and demand still set the price if nothing else then through the competition of other options due to increased opportunity costs.
Here is an example based on the (false) assumption of a monopoly of in the health insurance industry. If that business with the monopoly increases the average price of premiums per month from, say $250 to $500, it would be cheaper for me to cancel my insurance and simply put that $250 I would normally pay to the insurance company every month into a savings account for medical emergencies; a Health Care Savings Account (HSA). It would keep that other $250 a month in my pocket and I would avoid a deductible in the case of a medical emergency. So that business has an interest in keeping prices relatively reasonable so I don't go with the competing option of a HSA do to a lower opportunity cost; indirect competition still influences prices.
To claim that we have a monopoly in the health insurance industry today is absurd at face value. We have around 1700 providers in the country today. The claim that we have a monopoly of 1700 businesses is contradictory; and oxymoron.
You also cannot say that we have an oligopoly in this country today. An oligopoly is, "a market form in which a market or industry is dominated by a small number of sellers". 1700 providers today is hardly a "small number of sellers".
The fact is that monopolies (or oligopolies) cannot exist unless government in some way props them up (corporatism) and that is exactly what is happening. There is a federal ban on purchasing insurance across state lines. This has the effect of creating 50 separate oligopolies across the country. For instance, while there are 1700 providers across the country, in California, you can only choose from 6.
Also, there is a federal tax benefit that businesses have if they purchase coverage for their employees. This has the effect of hiding the costs of insurance and of health care in general from the general population which allows those few providers to increase their profits and go unnoticed for a very long time.
Then there are the Federal oligopolies; Medicare, Medicaid, the VA, SCHIP, the two largest by far are Medicare and Medicaid. Their arbitrary price controls (in the form of reimbursement rates that do not cover even half of the costs of the procedures at times) as well as their slow payout leads to increased costs of treatment for non medicare or medicaid patients to make up for the inadequate reimbursements. In short, Medicare and Medicaid serve as an entity that "dominates" the market; they are, by definition, an oligopoly.
You also have this article that Johnny was kind enough to point out in this thread that points out how Medical Boards have effectively Nationalized health care by getting each state to enact, "a Medical Practice Act which created a board of medical examiners with police powers to enforce their decisions"; basically, corporatism. Again.
Combine these facts with the massive amount of regulations and frivolous litigation and you can see why we have such high costs in the health care industry.
Government involvement has created and sustained oligopolies across the country through corporatism. Now, the reform being pushed through congress aims to double down on corporatism and further stifle the free market. However, if those restrictions by the government that prop up the oligopolies were removed, those oligopolies (besides Medicare and Medicaid) would disappear almost overnight. We need to end corporatism in this country, not amplify it.
Here are a couple more good articles from the same website as Johnny's article.
