Friday, February 12, 2010

Health care plan cracks appearing in Massachusetts

Governor Deval Patrick is seeking sweeping authority to review and reject rates charged by hospitals, physician groups, medical imaging centers, and insurers, in a broad new effort to make health care more affordable, particularly for smaller companies and their workers.

A 40-page bill filed by the governor yesterday proposes to give the insurance commissioner the power to essentially cap health care price increases.
--Kay Lazar, Michael Levenson, and Robert Weisman, Boston Globe, on proposed health care price controls in Massachusetts. Because gasoline price controls worked so well in the 1970s. HT: Jess Austin

The Governor's desire to reduce costs is understandable, since Massachusetts has the highest premiums in the nation.

But the Governor's approach to reducing expenditure is misguided because it will kill the incentive to supply healthcare services in the Commonwealth.  A better approach is to make consumers pay a higher fraction of their health costs, via increased co-pays and deductibles in government insurance and greater taxation of employer-paid premiums.
--Jeffrey Miron on the cost of price controls

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