The One Simple Thing That Makes the U.S. Economy Unmanageable

In 1956, CBS launched a new game show, The Price Is Right, in its daytime schedule. Contestants were presented with various objects, and the one who guessed closest to the actual retail price would win. The Price Is Right became the longest running game show in American history, because it spoke to a very casual yet deceptively important social question: How much does it cost?

There’s an important political assumption behind that question, which is that every retail item has one single price. And any buyer anywhere in America can pay that price to acquire it. Americans might have had different amounts of money, but they were all equal in that they paid the same amount for the same good.

While a single price in a market might seem a natural state of affairs, and economists love presenting simple supply and demand curves assuming as much, there’s nothing natural about it. In fact, a dense network of laws and norms created the notion of a single price for all buyers and sellers in a market, aka, The Price Is Right society.

We no longer live in such a society, because the legal framework behind a single public price for an item has fallen apart. There are many examples, but the easiest way to understand this change is to look at health care markets, where hiding prices, and the consequences thereof, is most advanced.

There Are No Real Prices In Health Care

A few days ago, Hunterbrook, a short-seller funded media outfit, released an investigative report showing what looks like a multi-billion dollar money laundering operation by the three largest health insurance companies. The allegation is that CVS, UnitedHealth Group, and Cigna are supposed to negotiate with pharmaceutical companies for lower drug prices for their patients. But instead, they collude with those pharmaceutical companies to force higher drug prices, and split the profits with them. It’s not a new charge. The Federal Trade Commission included this alleged scam in its complaint filed against these companies in September of 2024.

The details of what Hunterbrook reported are complex, but the problem boils down to something very simple. There are no real prices in most health care markets. You couldn’t play The Price Is Right for medicine, because there is no actual one price for anything.

The allegations involve the three main middlemen in drug pricing, which are known as pharmacy benefit managers.