A while back I started on a quest to figure out why health care costs in the United States take 17.5% of the Gross National Product (up from 5% in 1958) and continues to rise faster than inflation. This explosion of costs affects every household with increasing insurance rates, greater deductibles and co-pays, and higher taxes. This is a national time-bomb!
Lack Free Market Increases Costs
The major cause of these rising costs is lack of freedom in the health care market. Medical monopolies dominate the health care market place killing free trade. Let me explain.
The free market is where the economy runs on the principles of supply and demand with as little government interference as possible. If a business can produce a product or service at high quality, low price, and with good consumer satisfaction, it will prosper.
Certain businesses from the beginning of time have tried to capture markets and eliminate competition through monopolies often aided by privacy laws and tax free loopholes. According to Adam Smith in the famous “Wealth of Nations”, monopolies lead to lower consumer choice, poor quality, and higher prices.
Local Health Care Market Monopoly Alarming
When I examine the local health care market to see how well free enterprise principles are working, my findings were alarming. The health care market in the Coles County area is dominated by a well meaning monopoly primarily in the form of Sarah Bush Lincoln Memorial Hospital
I love Sarah Bush and the fine people that work there. But during
28 years in this area, I have seen the hospital take over and dominate almost every aspect of health care making it ever more difficult for tax paying businesses to compete. As one business man I spoke with stated, “They have taken over everything except ambulances and graveyards. I expect them to do that next.”
Privacy Props Up Monopolies
Sarah Bush is a private not-for-profit hospital exempt from property, income, and sales tax. Because of its private status, it is not easy to find out about the inner workings and finances of the hospital because most of this is carefully held secrets. To get this information, one has to find insiders willing to talk about it. There are no elected officials and no outside representation.
They do not have to tell the public anything except the Form 990 required by the US
An enterprise that receives tax dollars should never be allowed to operate without open meetings and disclosure. This is taxation without representation in the worst form. I am amazed that this is allowed.
One significant trend I have observed is that twenty five years ago most physicians in the service area owned or rented their own office. Today this is a rarity. About 150 physicians are employed by Sarah Bush and only a few doctors have private practices.
Since Sarah Bush physicians now work in property tax free buildings, this takes an estimated 23 million of property off the tax rolls and deprives the county of about $500,000 in tax revenue. This costs each household about $25 a year to subsidize these property taxes. Also, these businesses no longer pay corporate income taxes plus enjoy other tax-free perks for which private business is not eligible.
Amazing...the highest paid employees in the county and the ones least in need of a tax relief, receives such generous benefits..... does not seem right to me.
Other Monopolistic Actions:
In addition to the competitive advantage from being tax free, several other monopolistic actions by Sarah Bush include:
Legal price fixing
Controlling insurance payment to competitors
Demand for inside referral from employee doctors
Control of the media market
Other not so obvious free market abuses
The end result is not to public advantage. Where a powerful monopoly dominates the market place, there is less choice, poorer quality, less innovation, and higher prices.
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