The Health Insurance Exchange: Lessons from the Netherlands
This is Harvard Business School Professor Regina Herzlinger, writing in National Review:
Rather than entrepreneurialism, government-controlled markets encourage consolidation. In anticipation of the government market “reform,” for example, Dutch insurers consolidated to control 80 percent of the market. The providers consolidated, too, so they could bargain effectively with these oligopolistic insurers.
Limited choice, little price differentiation, consolidated insurers and providers, lack of entrepreneurs – this deadly brew causes price inflation. In the Netherlands, while total health-care-cost increases declined two years before the national market reforms, total costs rose by 4.4 percent and 5.1 percent, respectively, in the two years after the reforms were put into place. Individual health-insurance premiums rose about 8 to 10 percent in 2006-2007 and even more in 2008. Not surprisingly, the Dutch are unhappy with their insurance plans and the perceived quality of their health care.
Very good point. This is a huge worry.
Large, established firms always prefer government regulation to market competition. Large firms are the only ones with deep pockets and the experience to navigate the regulations and capture the regulators. That’s why most of the airlines opposed deregulation.