• Bilateral monopoly litigation, Pittsburgh edition

    What happens when an unstoppable force meets the immovable object? The Governor threatens to pass a law.

    Duopoly Bilateral monopoly litigation between the largest health system and the largest insurer in western Pennsylvania is turning into a nasty battle.  An update from KHN:

    Last week during a speech at the Pennsylvania Press Club in Harrisburg, Gov. Tom Corbett said he’s “deeply” concerned.

    “In my mind, they are both charities and they are both nonprofits and something is getting lost in between,” he said. “And I will work with the Legislature, if necessary, to address this.”

    The real story here is that Highmark tried to inject some competition into the Pittsburgh market for health care services. Usually the duopolists bilateral monopolists get along just fine, to the detriment of consumers.

    For a round up on most pending major health care antitrust litigation, including this case, see my TIE post from June.

    h/t to Brad F. for the KHN pointer

    UPDATE:  Austin points out that I really meant bilateral monopoly

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    • It might just be me, but the juxtaposition of this story (“Bilateral monopoly litigation, Pittsburgh edition”) and your earlier “Rorschach test: simple or complex?” sort of make the point that our endless idealistic search for some sort of “market solution” to health care has basically “jumped the shark!”

      If I’m not mistaken, Kenneth Arrow essentially refuted the viability of such an approach back in 1963. The information asymmetries in our current system, both natural and deliberate, make a mockery of the concept of “Free Markets.”

      Medicare, for all its problems, has proven to be a fairly efficient and economical system; it is so because it is it is at heart a “Single Payer” protocol. As I understand them, the UK, Canadian, French, German, etc… systems are all mostly based on this concept as well. But, alas, we know better…

      Sigh…

      (Please keep up the excellent work on TIE, I look forward to it every day. Thanks)