Who is Making Money in Our Health Care System?

BY Dave Gustafson  April 9, 2010 at 4:47 PM EST

Question: Everyone is constantly saying that “health care costs are rising,” but besides the health insurance companies, I don’t see anyone making any money. Everything costs more and more, but who’s keeping it all? I hope you could do a piece exploring why medical costs are rising, what costs are actually rising, and who’s getting all our money.

Paul Solman: Since the piece you suggest will have to wait, given the coverage we’ve got in the pipeline, here’s my best shot at an answer: EVERYONE is making money. But, because of competition, they may not be making as much as they used to. And that’s just how a competitive market system is supposed to work.

Indeed, in economic theory, there is really no such thing as a “profit,” because any costs beyond those of doing business (broadly speaking) are theoretically competed away, as producers charge less than their rivals. (Of course, economic theory sometimes bears little relation to economic reality, but we’ll save that for another question.)