Something I noticed as I read through a few articles on monopolies is that monopolies are seen very negatively. They're seen as a threat to consumers as well as a threat to fair competition in the market. I agreed until I heard Dr. Bylund make the atypical point that, if we think about what it means, monopoly power isn't really a bad thing on its own.
"Monopoly" means "single seller." If an innovative business comes up with a brand-new product, they become the monopoly of that product. Thus, all companies that innovate and create new or improved products are monopolies, at least until other companies follow suit. As Dr. Bylund said, it wasn't bad when Steve Jobs invented the smart phone; it may have been very expensive to buy at first, but consumers still had the option to buy the common functional flip phone for much cheaper.
So, monopolies aren't the problem: the problem is when other companies are somehow prevented from competing with monopolies from selling a similar product but for cheaper or by selling a more innovative or valuable version.
Dr. Bylund argued that this is the reason hospital bills are so expensive in most States; hospitals can abuse CON laws to prevent other hospitals from being founded. This is because a new hospital would need to fill out a certificate of need (CON) to be approved by the other hospitals in the area before being passed by the government. The idea behind it is to "control health care costs by restricting duplicative services and determining whether new capital expenditures meet a community need." (NCSL). But would hospitals already in place really want to invite more competition? And because they can choose to prevent competitors from coming into play, and because hospital services are so necessary for people, they can charge their consumers nearly without restraint.
And I don't think overcharging is the greatest concern here: with less hospitals, people who have emergency medical needs will be less likely to receive the help they need and survive (Georgia Health News). Dr. Bylund offered that the solution is to abolish CON laws for the medical industry to allow new hospitals to compete for more profit by undercutting overcharging hospitals. Not only would medical bills be far cheaper, but patients in critical need would have more options and could receive help faster.
I am critical of this proposal at face value, though. If CON laws were abolished for hospitals, that would invite the creation of new hospitals provide cheaper and more innovative services; wouldn't this be risky for patients going to these newer hospitals? In other words, wouldn't allowing for anyone who can round up some doctors and start up a new hospital invite them to experiment with services that might be more innovative but also might be less practiced? There's a difference between experimenting with a new type of phone and experimenting with human medical needs. Additionally, because these start-up hospitals wouldn't need the approval or consent of larger and more experienced hospitals, they would probably be less likely to provide tried and true medical services.
If CON laws were to be abolished, I believe there would only be one way to prevent start-up hospitals from endangering their patients, which would be for the government to regulate what kinds of equipment, drugs, or other services they could use. The government could probably monitor the kinds of services that the more experienced hospitals provide and could enforce the usage of similar services by newer hospitals. Or, if that is too much for the government to do, larger hospitals could appeal to the government if they noticed smaller hospitals adopting questionable practices.
The issue of absurd medical care bills and CON laws shows that addressing monopoly power is not always simple. This economic issue is challenging and will not have simple solutions, but I hope that the government will one day do something better about the insane medical bills that Americans pay.
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