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The Case for a Private Healthcare Insurance Monopoly

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Abstract

This article advocates for a regulated private monopoly as an audacious solution to replace Obamacare, help manage Medicare and Medicaid and reform the US healthcare insurance industry. Contemporary economics vilifies monopolies and praises the ‘magic wand’ of perfect competition without much debate on the merits of these assumptions. The problems with the perfect competition model as applied to healthcare insurance are well established, but exploration of other possible economic models (i.e. monopoly and oligopoly) as a replacement for Obamacare is non-existent. New thinking about the role of monopolies may help achieve public policy goals and make health insurance available to the largest number of people at a reasonable premium while containing medical costs.

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Notes

  1. These statistics are my own, developed from the Bureau of Economic Analysis [27] and the Centers for Medicare and Medicaid Services [28].

  2. For example, a review of the empirical data on the health insurance industry revealed the challenges of forming a consistent database because of privacy concerns, changing policies, and comparisons of an array of different policies. Thus, organizing empirical data and calculating deadweight losses is problematic.

  3. This would be similar to the situation in Australia, where an individual who waits longer to sign up for the programme (by a certain age) must pay a higher total premium or loading fee per year for several years. Conversely, early enrollees could be awarded with higher maximum lifetime payouts, and people who do not consistently pay into the system could be penalized with lower maximum lifetime payouts.

  4. The US government has experience in regulating monopolies. For example, AT&T was regulated by the Federal Communications Commission (FCC), which approved AT&T’s pricing and policies.

  5. Price’s EPFA has a provision for resolving medical disputes that would act as a good template.

  6. A similar tactic was used to chase out state bank notes from the US economy around the US Civil War.

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Acknowledgements

The author thanks two anonymous referees and the editor (Timothy Wrightson) for their helpful comments on earlier drafts.

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  1. College of Staten Island, City University of New York (CUNY), Staten Island, NY, USA

    Paul E. Orzechowski

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Correspondence to Paul E. Orzechowski.

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Orzechowski, P.E. The Case for a Private Healthcare Insurance Monopoly. Appl Health Econ Health Policy 16, 433–443 (2018). https://doi.org/10.1007/s40258-018-0381-y

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