1 of the fallacies from which this magazine would like to disabuse readers is that the free market system as it applies to the healthcare system is working well in holding down costs in the United States of America. This lack of control is, of course, a common theme in the OMRUM world. The market is not working by any stretch of imagination.
As an example of a field in which the market is doing an exemplary job, consider the computer world of memory, disk drives (especially solid-state), and CPUs. In the early 1980s, this author worked on a minicomputer with a 400 MB hard disk which cost about $50,000. 40 some years later, a 4 TB solid-state disk cost approximately $250 (as of the date of publication). So this means 10,000 times the storage at 1/200 the cost (i.e., the cost of storage has gone down 2,000,000 fold). Plus, for the record, the consumer price index (CPI) went up threefold over that interval (i.e., tripling the improvement). Few of us would deny that that is simply amazing.
Somehow, just the opposite is happening with healthcare costs. Despite millions of Americans including physicians, administrators, logistical wizards, economists, and many others working to reduce healthcare costs while maintaining quality, the cost of medical services only worsens when compared to that same CPI. The free market has been unable to control costs and indeed, copious amounts of research assert just the opposite. In an article published by Peterson KFF-Health System Tracker, How Does Medical Inflation Compare to Inflation in the Rest of the Economy? (Rakshit et al.) on August 2, 2024, the authors included a graphic demonstrating how medical costs exceeded the CPI by almost 30% over the last 25 years. If this is so, where is all of that money going?
Not surprisingly, for-profit medical insurance companies are earning more and more profits in this very complicated market. Recently, a journalistic website, The Lever, featured a piece on this very topic (Dec. 13, 2024). Helen Santoro, wrote Top 5 US Health Insurers’ Annual Profits Jumped 230 Percent Since ACA’s Passage. As a reminder, in 2014 the ACA (Affordable Care Act) was fully implemented and some headway was made in reducing the number of uninsured in the United States. In this article, it was noted that American insurance companies have made $373 billion in profits in the last 11 years. Depending on the accounting, one has to suspect that it is actually much more than that. In spite of greater profits, the insurers don’t seem to be investing in cost reducing behaviors. Instead, a good part of their higher intake involves denials of payment forcing physicians and other entities to make costly appeals. Sadly, the market (purchasers of insurance) is not shifting to the most efficient carriers. Counterintuitively, a greater number of insurance providers in the market cause rates to rise. “High market concentration tends to lower competition among health insurers, which can harm patients by raising insurance premiums above competitive levels,” said Jesse Ehrenfeld, president of the physician lobbying group American Medical Association, in a 2023 press release. Again, this boggles the mind and reinforces how a competitive marketplace for health insurance has not materialized for any number of reasons in the United States.
So, what does the immediate future hold for healthcare costs? It is exceedingly grim.
In Becker’s Hospital Review (6/9/25), author Jakob Emerson wrote the article Payers Seek Double-Digit Exchange Rate Hikes for 2026. The article enumerates a number of double digit increases in various states, including Connecticut, Maryland, Massachusetts, Oregon, Vermont, and Washington state. Indeed, the article notes that “14 insurers in Washington’s 2026 individual market have requested an average rate increase of 21.2%, the office of the insurance Commissioner reported”. In this market, a 21.2% increase average for all the insurance plans in the “individual” market will no doubt drive many people off the insurance roles entirely.
The author of this article, as both a treating physician and a citizen of this country, has heard many people voice their concerns that a “government run” healthcare system might be a disaster. However, what we have currently is a disaster that shows no sign of improvement. Indeed, in the previous paragraph, double-digit increases seem imminent at the same time that inflation seems comparatively tame. Framed in different language, the current healthcare system costs run outside the laws of market economics and any semblance of common sense.
With the above in mind, the time has come for common sense changes in our healthcare system:
- A single-payer system (since, paradoxically, multiple carriers in a market worsen the cost of services)
- Universal healthcare (since, prevention and early intervention save money from expensive emergency room costs)
- Global capitation (since it will promote healthcare process streamlining, unlike the current free market model)
- Financial rewards to patients who take better care of themselves
- Reduction of administrative overhead for physicians and hospitals (e.g., no prior authorizations, no retrograde “take backs” by the insurance companies, a single patient medical record, etc.)
If the above modifications are made, this author believes that patient care and satisfaction will improve while reducing costs 50% (possibly more). Ongoing double-digit increases are simply unsustainable. Our current system is broken beyond repair.