If there is a profit to be made, somebody will come up with a product and/or services at a price people are able to pay. And healthy, honest competition between profit earning entities never forces prices higher.
In this instance, it can. The reason, of course, is that the actual service you're after isn't provided by your insurance company (unless you happen to be in an integrated care network). Your insurance company is merely a payer; health care itself is provided by the aptly-named providers. The price of those health care services is set through a negotiation between a provider and every payer who seeks to have that provider in its network. So, for example, a hospital will have a chargemaster containing every service available and representatives of payer and provider alike will sit down and agree on reimbursement rates for each one.
These reimbursements (i.e. prices) aren't absolutes, however, as 1) they are periodically re-negotiated and 2) different payers will likely negotiate different rates (this isn't true in Maryland, the only state that currently has an all-payer rate setting system). So what does that imply? Smaller insurers have less leverage in negotiations with providers because they can offer fewer patients; as a result they're less able to get favorable reimbursements, which in turn means they have to pass on their costs in the form of higher premiums.
Similarly, as you dilute the insurance market (er, increase healthy, honest competition between insurers) you're in fact empowering providers relative to payers. Which gives them more power to set the prices of what they're selling. And that's something that will ultimately show up in the premiums of the insurers who have to accept those reimbursement rates.
In picture form:
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Putting it into its simplest terms, anything the government mandates re commerce and industry or in matters that affect commerce and industry, an artificial threshhold unrelated to the free market will be created. The more the government becomes involved, the less effectively the free market can work. (This principle is included in every Economics 100 class worth its salt.)
Further, once those with unchallengable power become involved, the temptation to increase tinkering with the system for one's personal advantage is way more than many will be able to resist. And it is way too tempting for others to take advantage of the graft and corruption that invariably will become part of the equation.
But left to their own initiative with sufficient freedom, there will always be people looking for ways to prosper and who will see a way to do that by providing products and services that others want and are willing and able to pay for. And those who provide the better products and services at the most attractive price will be the ones who prosper more. People's desire to prosper becomes a powerful incentive to be creative, innovative in order to provide the most attractive product to the consumer.
And that is why a private healthcare industry as opposed to a government run one will be far superior and far less costly and far more affordable.
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