The Senate Judiciary Committee recently held a hearing to investigate consolidation in healthcare markets. Hospitals are increasingly buying up other medical providers to increase negotiation leverage with insurers. Over recent years, rising hospital expenditures have been the primary factor in rising healthcare costs.

Yet, whatever market power hospitals possess is limited to local areas, and even the largest hospital system accounts for a tiny fraction of the industry nationwide. Given the astronomic prices associated with many surgical procedures and legal requirements that insurers cover all services at local providers, the most effective way to check the pricing power of hospitals may be to broaden the market — allowing hospitals and insurers to compete without artificial restrictions at state lines.