The crippling increase in costs is obvious
Healthcare costs are rising rapidly and this is hurting everyone. But if we look closer, we see that the main reason for this is just a few large companies. A 2023 study shows that over the last decade, just five insurance companies (if you count all the blue ones as one) have controlled over 90% of the market.
The current administration talks a lot about the need for more competition in the health care system. It focuses on drug prices, hospital monopolies and price transparency, but does not talk about the real problem that drives up costs every year: the health insurance industry itself.
To be clear, the average family now pays over $23,000 a year for health insurance, which is about a third of the median household income. And that doesn’t even include deductibles. Not only are these enormous costs difficult to manage, they are crushing families and businesses. Employers pay more and get less, and families struggle to choose between paying for health care and buying food.
Although insurance companies can negotiate lower prices with doctors and hospitals due to their size, premiums continue to rise. The reason? There is not enough competition between insurance companies to lower premium prices.
It is argued that price transparency – knowing the cost of healthcare services – is important to reduce costs. And yes, knowing prices is important so we can make better decisions. But even as we demand more transparency, we ignore the data we already have. Just look at the stock market. The rising revenues of the largest insurance companies show us that they are reliably making huge profits from the very system they are supposed to manage, and there is no end in sight.
Every year, these companies merge and acquire their competitors, reducing competition and giving them more control. Some studies suggest that new regulations like the Affordable Care Act (ACA) have accelerated consolidation, but let’s face it: It’s not about better care or lower costs—it’s about control.
This consolidation isn’t just affecting insurance companies. Hospitals are merging too, in part due to pressure from these large insurers. The result? Fewer independent doctors and hospitals, less competition, and higher costs for everyone. Insurance companies are even buying clinics and hiring doctors outright. What started as a system to manage risk has become a giant machine that controls every part of health care – and we’re all paying the price.
The real question is: what are we going to do about it?
First, we need to create more competition in the health care industry, including in the insurance industry, by enforcing existing laws that limit further acquisitions and consolidation. In addition, federal and state legislatures need to crack down on anti-competitive behavior to limit the power and influence of these giant corporations.
Independent doctors and small pharmacies are being squeezed out by these big companies, and that hurts everyone. We need to encourage competition across the health care chain. Only then can we begin to reduce costs, improve access, and ensure that patients get the care they need.
It’s time to stop believing that more information alone will solve the problem. More transparency without competition only shows us how much we are being exploited. We have enough evidence right in front of us. The real challenge is whether we have the courage to act.
