Americans typically don’t shop for their doctor, hospital, or health insurance plan. A lack of shopping means that health care markets lack the competitive discipline that characterizes most of the American economy. Competition is important because it enhances quality and convenience and lowers prices.
Hospital consolidation and acquisition of physician practices have contributed to this lack of competitive pressure in health care. As a result, hospital prices have risen more than three times faster than inflation while average family premiums plus deductibles for workplace coverage have climbed from $6,000 to $25,000 over the past 25 years. Economists agree that higher health plan costs directly result in lower wages.
Nearly half of Americans get health insurance through an employer. In a traditional employer health plan, employees have no control over the design of their policy and little incentive to find the best value for their spending. Most employees get a choice of no more than three employer-chosen plans. Employees at small businesses typically get only one option.
We can improve health care and drive costs down by giving Americans greater choice and control of their coverage, allowing them to take their business to insurers that offer them the best deal.