Freedom Line Blog

A revealing commentary this week in The Wall Street Journal on reduced competition and insurance industry consolidation under ObamaCare coincides in an interesting manner with a new Gallup poll showing very low public confidence in big business.

In “How the Affordable Care Act Is Reducing Competition,” physician and American Enterprise Institute (AEI) resident fellow Scott Gottlieb lays out how ObamaCare by design requires industry consolidation to accommodate its massive regulatory burdens and higher operating costs:

To sustain themselves, insurers must spread fixed costs over a larger base of members.  The bigger they are, the easier it is to meet the government-imposed cap on their operating costs while cutting their way to profitability.  This pressure discourages new health plans from launching.  Startups often must channel more money into initial operating expenses.  But the caps largely prevent this, so the market stagnates…  ObamaCare’s architects saw these trends coming – and welcomed them.  They mistakenly believed that consolidation would be good for patients, on the theory that larger companies would have more capital to invest in innovations that are thought to improve coordination of medical care, such as electronic health records, integrated teams of medical providers and telemedicine.

This was a profound miscalculation.  The truth is that the greatest innovations in healthcare delivery haven’t come from federally contrived oligopolies or enormous hospital chains.  Novel concepts – whether practice-management companies, home healthcare or the first for-profit HMO – almost always have come from entrepreneurial firms, often backed by venture capital.  That venture capital has been drying up since ObamaCare was passed.”

Meanwhile, a new Gallup survey reveals that is precisely the sort of big-business favoritism that Americans distrust:

Americans are more than three times as likely to express confidence in small business as they are in big business.  Sixty-seven percent of U.S. adults report having a ‘great deal’ or ‘quite a lot’ of confidence in small business, far eclipsing the 21% who are similarly confident in big business.  Confidence in small business is up slightly from last year’s 62%, while confidence in big business is unchanged.”

This helps explain why, despite Barack Obama’s ongoing protestations and false assurances, the healthcare law bearing his name remains widely unpopular with Americans it affects.  Each week brings a fresh wave of bad news about ObamaCare, such as this week’s news of skyrocketing costs unanticipated only by those who supported the law.  Its unpopularity, along with the unpopularity of big government and big business more generally, provide optimism that Americans remain open to conservative and libertarian efforts toward replacement and reform.