Our Concentrated Health Care Markets Are Anything but ‘Free’

Competitive health care markets or unregulated health care markets: choose one.

Competition, along with its attendant synonyms like “choice,” is the Republican Party’s favorite rhetorical reference point for describing how to fix America’s broken health care system. The 2024 GOP platform promised to control health care costs by promoting “Choice and Competition.” House Speaker Mike Johnson, touting the GOP’s new health plan in December 2025, described the bill as “tackling the real drivers of health care costs to…increase access and choice.”

Market concentration is competition’s natural predator, and lawmakers in both parties have been raising the alarm for years about growing concentration in the health care sector. They are correct to be concerned. Excessive concentration in the health systems’ various sectors—payers, providers, hospitals systems—is associated with higher prices, reduction in services, provider closures, higher premiums, and lower quality. It is notable, then, that the recent Republican health care plan said little about addressing concentration. Invocations of competition in this context seem not to mean, “we should ensure productive competition in health care” so much as, “we should leave the free market alone to do its thing, and competition and choice will follow.”

Past Republican rhetoric suggests this is the correct interpretation. Donald Trump’s 2016 campaign promised health care based on “free market principles.” He was not alone. In one GOP primary debate, Carly Fiorina channeled the prevailing sentiment on how to fix health care: “We need to try the free market. The free market. Where people actually have to compete.” This kind of language, preeminent in Republican health policy discourse for decades, papers over a fundamental contradiction at the heart of that discourse. It is certain that productive competition in the health care space is worth promoting. It is also true that a laisse-faire attitude of benevolent neglect cannot achieve that.

For one thing, health care is not a normal market. As Oren Cass wrote recently in Commonplace:

The patient as insurance customer is a peculiar figure, drifting haplessly through a Kafka-esque non-market. He probably did not choose his insurer, that decision coming from an employer. He did not choose the services covered, that decision coming from a regulator. He may not have chosen his doctor, that decision constrained by his insurer’s network. He has little sense of the price he will be charged, or how much of it he will have to pay, and likely anticipates with dread having some long fight with a bureaucracy about his bill after the fact.

One might add that, in emergency situations, the choice to utilize the health care system at all may not belong to the patient. The lack of free market forces is not the problem here; miscategorizing health care as a typical market is.

But even in those instances when the health care sector is properly thought of in market terms, and genuine competition might indeed improve quality and access while reducing costs—as competition is meant to do—leaving the market to its own devices will have the opposite effect. Like any market, the health care sector will concentrate if allowed—and it has.

Concentration of ownership has been increasing markedly across health care suppliers, providers, and insurers. A recent report from the Department of Health and Human Services put it bluntly:

Over the last thirty years, the health care industry has experienced a dramatic and continuous trend of consolidation across the country. It is now more concentrated than ever. Consolidating transactions have taken place between entities that offer similar services (horizontal mergers), between entities that offer different services along the same supply chain (vertical mergers), and across markets between different regions (cross-market mergers). Almost every sector and type of health care provider has experienced consolidation.

Health insurance markets at the state level are extremely concentrated. The Government Accountability Office (GAO) considers a health insurance market “concentrated” if three or fewer insurers dominate 80% or more of the market. By that definition, 42 states plus Washington, D.C. have concentrated health insurance markets. When consolidated market power gives insurers the upper hand, savings extracted from providers are not passed along to their ostensible beneficiaries. That only happens, as a KFF brief concludes, when “the insurance market is sufficiently competitive; where health insurance markets are more concentrated, premiums tend to be higher.”

Hospitals are a particularly dramatic example of concentration. Between 2018 and 2023 there were 428 announced hospital and health system mergers. Inpatient hospital care in about half of American metropolitan areas was controlled by one or two health systems in 2022; in over 80%, one or two systems controlled over three-quarters of the market. Generally speaking, price increases without commensurate increases in quality of care have resulted.

A 2022 RAND Corp. study, echoing “a large body of literature [that] has found substantial increases in hospital prices as a result of horizontal consolidation,” found that price increases resulting from hospital mergers range anywhere from 3% to 65%. The Department of Health and Human Services concluded in 2024 that “empirical research unambiguously shows that hospital system-led acquisitions and mergers are associated with higher prices for services.” The Medicare Payment Advisory Commission (MedPAC), the statutorily mandated body that advises Congress on the state of Medicare, put it bluntly in 2020: “the preponderance of evidence suggests that hospital consolidation leads to higher prices. These findings imply that hospitals seek higher prices from insurers and will get them when they have greater bargaining power.” Higher prices from insurers naturally result in higher premiums for individuals.

Legitimate concerns about barriers to entry and the benefits of economies of scale are among the forces pushing hospitals toward consolidation, and there are instances when hospital consolidation can keep poorer or more rural hospitals alive. But these cases prove the rule: The American health care system incentivizes a kind of consolidation deathmatch, in which various players jockey for position in a badly structured and dysfunctional market, and in which their relative success at achieving market power does not generally result in better prices or higher quality for patients.

Hospital systems and insurers are not the only areas of concern. The supply of medical providers is artificially and harmfully constrained by the American Medical Association’s monopolistic behavior. For years, the AMA deliberately restricted available residencies to keep the supply of doctors tight; America is still digging itself out of the physician shortage that resulted (despite the AMA’s recent change of heart on the matter), and the AMA still actively lobbies against allowing other qualified professionals like nurse practitioners and pharmacists to provide certain services. This provider shortage is exacerbated by the prevalence of noncompete agreements—a fundamentally anti-competitive mechanism—imposed on doctors by hospitals, which presents such a challenge to affordable health care access that some states have banned or severely restricted the use of noncompetes specifically for medical professionals, even if they do not ban them otherwise.

Many discrete specialties and sectors are also concentrated, with harmful consequences. Dialysis is a stark example. Over 80% of the U.S. dialysis market is controlled by just two companies who, per one study, “use their excessive market power to maintain a stronghold on delivery of dialysis, forcing private insurers to pay nearly 4 times the Medicare rate for dialysis services and reaping billions of dollars from a health care system already stretched to its limits.”

And looming over the entire question of health care concentration is the specter of private equity, whose rapacious “appetite for hospitals may put patients at risk,” as one Harvard School of Public Health headline put it. A 2025 bipartisan Senate investigation concluded that “private equity’s ownership of hospitals earned investors millions, while patients suffered and hospitals experienced health and safety violations, understaffing, reduced quality of patient care and closures.” Nor is it just hospitals in the crosshairs. Physician groups, mental and behavioral health providers, nursing home providers: private equity cometh for them all.

Only policy intervention can address these perversions of the American health care system, which result from leaving the market to its own devices rather than governing it appropriately. The status quo has delivered health care “markets” that are neither free nor conducive to the provision of affordable, accessible, quality health care to the American public.

There is an essential contradiction underneath the thin GOP health care rhetoric. If by “competition in health care” Republicans mean “let the market do whatever it wants,” markets will run toward maladaptive concentration and a distinct lack of genuine, productive competition. If by “competition” they instead mean, well, competition, then they need to embrace the reality that active market structuring will be required for real competition to have hope of ameliorating what ails American health care. As in any market, protection against concentration and its attendant consequences requires the presence of good policy, not the absence of policy. Free markets (as in real competition in health care) or “free” markets (as in private forces run amok): choose one.