Dislocations of a Non-Competitive Market

It turns out that when there’s no market competition, and when there’s no price signaling in any sort of market, some producers charge more than others, and consumers pay the price (to coin a phrase).

Some hospitals charge up to 10 times as much as others for standard medical scans, according to the latest analysis of previously secret market rates.
Median prices for taking images of the brain, legs, abdomen and chest differed across hospitals by thousands of dollars in some cases….


Hospitals and insurers have long set prices in confidential negotiations, which has frustrated employers seeking to curb costs by shopping for better deals under worker health-benefit insurance plans. The average premium for family insurance offered as a workplace benefit increased 4% this year….

Think how us consumers, feel.

There’s this, too:

Cost difference can’t explain the price spreads…. Other factors that determine prices, the researchers said, include negotiating skills or how much leverage hospitals have in contract talks with insurers.

All of which is strongly potentiated by the prices and pricing mechanisms being kept hidden from the market at large.

Ge Bai, a Professor in Johns Hopkins Bloomberg School of Public Health’s Health Policy and Management facility, is being polite:

This is very far away from a competitive market[.]

Go figure.

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