This letter of mine appeared in this past Thursday’s edition of the Boston Globe:
Dr. Ashish K. Jha and professor Irene Papanicolas correctly diagnose a serious disease that afflicts US health care: lack of competition (“Your hospital bill is too high. Price caps are the answer,” Opinion, March 9). But their prescribed treatment — capping the prices health care providers can charge — would further sicken the patient.
The high prices that distress Jha and Papanicolas are perhaps the most common manifestation of monopoly power. However, masking this unpleasant symptom with price ceilings not only would do nothing to cure what actually ails the patient but it also would cause that monopoly power to manifest itself in even worse ways, such as delays in medical treatment, reductions in quality of care, and surcharges on services that are now supplied gratis as part of health care packages, such as patients’ hospital meals and bed-linen changes.
A reasonable case can be made that the disease of inadequate competition is caused by excessive government interference in the health care market. Treating that disease by imposing symptom-masking price ceilings would be akin to treating patients suffering the agony of alcoholism with the temporary relief of a shot of whiskey.
Donald J. Boudreaux
Fairfax, Va.The writer is a professor of economics and the Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center at George Mason University.
