John Goodman explains why price controls, whether they take the form of payment cuts to doctors, hospitals or some other group of care providers, do not lower costs:
Social cost is the sum of all the individual costs. That is, it’s the cost to me plus the cost to you plus….. etc., summing over 300 million people. In doing the summation, we can’t omit whole groups of folks.
In other words, when summing up the real costs paid by society for a particular set of health care policies, you can’t arbitrarily omit doctors, nurses, hospital staff, et al from your calculation. Why?
Squeezing the incomes of providers shifts costs, but it doesn’t lower them. It makes patients better off (in the short run) and providers worse off. But that does not lower cost for society as a whole.
But this is precisely what all government-run health care programs attempt to do. The Canadian health system does it. Medicare and Medicaid do it. And the President’s ”public plan” will do it as well.
And when that strategy fails to control costs, the government-run plans (including the public plan) will resort to their only remaining cost-cutting strategy: restricting the amount of care you receive.
Post a Comment