from The New Yorker, a review on the book America’s Bitter Pill by Steven Brill.  The review is by Malcolm Gladwell.

excerpt:

Many state Medicaid programs have, similarly, a rule that says health-care providers cannot charge Medicaid more than the lowest price they give to anyone else. If you run an MRI machine and allow a privately insured patient to get a scan for two hundred dollars instead of a thousand dollars, you have to give all your Medicaid patients MRI scans for two hundred dollars. That’s a classic “health care is different” solution to the problem of excess health-care costs: pass a law guaranteeing the “sale price” to publicly funded patients. So what’s the result? Goldhill asks. Health-care providers behave the way any market participant would under the circumstances. They don’t have sales. What incentive would the Gap have for holding a Boxing Day blowout if, by law, it would have to offer those same low prices every other day of the year?

HKO

Once again in the effort to lower costs policy wonks accomplish the opposite.  They fail to comprehend the problem with trying to micromanage complex economic systems. They fail to see that in order to benefit one party another is likely to suffer.

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