Why Your Phone Got Cheaper — and Your Health Insurance Didn’t
Skyrocketing health insurance prices are Americans’ “top cost concern.” In fact, subsidizing staggering insurance price increases for 2026 was the Democrats’ predicate for the 2025 government shutdown. Premiums were increased as much as 30-40 percent above 2025 rates, along with greater out-of-pocket copays and higher deductibles.
Political bickering and affordability fears have led many to accept rising insurance costs as inevitable. That assumption deserves a closer look.
In 1990, the Motorola mobile phone was priced at $3,500. Today, you can buy a TCL flip-phone for less than $20. And while the latest iPhone costs roughly $1,000, it has more computing power than the original NASA space shuttle and is essentially a micro-computer with hundreds of functions in addition to making a phone call.
Over time, prices for goods and services generally come down, viz., flip phone, and/or increase value to the consumer (iPhone). This is true for almost everything, except health insurance, where prices consistently rise even as the value to consumers (medical care) declines.
Prices would have to be acceptable — i.e., affordable — for consumers, or they simply won’t buy.
The difference is free market forces that drive prices down and quality up. The everyday market for goods and services has them; health insurance does not.
First, when purchasing anything other than health insurance, buyers have an incentive to economize because they are spending from a limited pool of personal funds. Second, sellers must compete for those funds; those who set prices too high will make few or no sales.
The everyday (free) market has two parties: buyers who are consumers and also payers; and sellers whose prices (charges) are what buyers pay.
By contrast, the healthcare market has three parties, not two. The first party is the buyer or patient who does not pay out of pocket for care consumed. Second party is the seller or doctor, who may charge whatever he or she wishes, but is paid a small fraction of that charge — the amount decided by a third party. Finally, there is a third party — private insurance or government — that regulates what the buyer or patient will buy and dictates what the seller or physician will be paid.
With Washington’s stringent regulations, U.S. healthcare is a centrally controlled economic system similar to the Soviet Union and thus is the antithesis of a free market.
Without buyers who are also payers and without sellers who compete for buyers’ dollars, prices rise, and quality falls. The result is what Americans experience: unaffordable insurance and inaccessible care.
The answer is to fix the root cause: infuse healthcare with the missing free market forces. Reduce third-party control and return buying power where it belongs: to patients. After all, it is their money being spent (by others).
A good first step to patient empowerment would be to complete a long-overdue legislative task: repealing the World War II wage freeze accommodation called the “employer-sponsored” health insurance benefit (ESI). Passed shortly after Pearl Harbor, ESI was a way to get around wartime wage freezes. All the wage freezes were repealed after 1945, except one — ESI. For 80 years, the monies sent to insurance companies as ESI were not really “employer-sponsored.” They were wages earned by employees but diverted to insurance sellers, tax-advantaged to the employer. In 2025, the ESI averaged $26,993 for 84 million American workers.
If ESI were repealed and $26,993 were put tax-free into (new) no-limit HSAs, nearly half the country, including workers’ family members, would be empowered. An enormous free market would suddenly exist for health care goods and services, and for health insurance.
Prices would plummet in the face of consumers’ need to economize and inter-seller competition. Wait times for doctor appointments would be measured in days or even hours, not months. The cost of regulation would diminish substantially.
Insurance sellers would have to offer policies consumers want, whether short-term insurance currently banned by the Biden administration, high-deductible catastrophic policies, or even pay-full-charge policies. Prices would have to be acceptable — i.e., affordable — for consumers, or they simply won’t buy.
Our health insurance “affordability crisis” would be resolved by less regulation, not more.
READ MORE from Deane Waldman:
Empower Patients, Reclaim Healthcare
Empowering Patients in a Broken System
How Medicaid Made a Billion-Dollar Crime Inevitable
Deane Waldman, M.D., MBA, is professor emeritus of Pediatrics, Pathology, and Decision Science; former director of the Center for Healthcare Policy at Texas Public Policy Foundation; former director of the New Mexico Health Insurance Exchange; and author of Become an Empowered Patient. Follow him on X.com@DrDeaneW and visit the website, www.empowerpatients.info.