Apparently Forcing Everybody to Buy Insurance Doesn't Make Prices Go Down

I have some shocking news for you. Even though the Affordable Care Act (ACA) was passed with the promise that forcing everybody to buy insurance would reduce prices the prices have -- you might want to sit down because this is going to be shocking -- gone up:

Insured Americans are having to shell out more and more for healthcare, particularly, hospital visits, researchers report this week in the journal JAMA Internal Medicine. From 2009 and 2013—before the biggest provisions of the Affordable Care Act took effect in 2014—people with individual or employer-sponsored health insurances saw a 37 percent rise in out-of-pockets costs for a hospital stay. Average bills jumped from $738 to $1,013. That’s about a 6.5 percent increase each year. However, overall healthcare spending rose just 2.9 percent each year during that time-frame and premiums—the cost to buy insurance—rose by around 5.1 percent annually.

“Every year, people freak out about how high premiums have gotten and how they continue to grow exponentially, but [out-of-pocket costs are] actually growing even faster,” Emily Adrion, first author of the study and a researcher at the Center for Healthcare Outcomes and Policy at the University of Michigan, told Bloomberg.

What could possible be going on here? How can involving more government not fix a problem? The reason is actually quite simple. When you're required to do business with somebody they have little motivation to provide you a quality service or keep your costs low. This is especially true in a market that is heavily protected against new competitors. The health insurance market, through regulatory protections, is hard for any new competitor to enter unless they're in possession of billions of dollars. Because of that the already established insurance companies feel safe keeping their prices high so long as the other established companies also keep their prices high.