It appears that our fine health insurance companies have finally manged to get the Senate angry which has led to some unintended consequences. Like legislation to make health insurers subject to anti-monopoly laws.

And this has provided some serious consulting opportunities for various mental gymnasts with degrees in the dismal science. Mostly opportunities to testify about the dire impact that regulating insurance monopolies will have on our well being.

As a guide to this testimony Wonks Anonymous offers a brief exposition of the idea of market power. It works something like this: A producer in a competitive market cannot raise the price of his product or lower the price paid to suppliers. If he does, customers who buy his goods will go elsewhere and people who supply labor and other inputs will sell to someone else. The producer has no market power.

Health insurers tend to have at least some market power. They are big, they may coordinate their activities and so on. When a health insurer raise prices all consumers do not immediately go to a cheaper alternative because chances are that the only other competitor in the market has also raised prices. When a health insurers lowers payments providers are, to a certain extent, stuck with the price drop,

Now enter the crack team of trained economists who will tell us that, if we prevent insurance companies from violating antitrust laws, prices of insurance will surely rise because health insurance companies will no longer be able to force providers to accept less.

But my dears. If a health insurer is big enough to force doctors and hospitals to take pay cuts then isn't it also big enough to force consumers to pay more? Can you tell me please why an insurer with this power would use it to lower payments to providers but not to raise prices to consumers? Would that be out of altruism?

In fact monopolies and uncompetitive markets cause harm in markets for products and markets for resources. They charge artificially high prices - in this case lowering the amount of health care consumed - and they push down the pay to producers - in this case lowering the amount of health care services offered.

The gains from this arrangement flow entirely to the monopolist.