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Obamacare: The Price Controls Begin

Posted By Conn Carroll On December 24, 2010 @ 1:00 pm In Obamacare | Comments Disabled

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The Department of Health and Human Services announced [2] Tuesday that, starting next year, health insurance companies must receive permission from the Obama administration before they can raise rates higher than 10%. As we warned [3] before Obamacare even became law, this is a form of price control [4], a government intervention that has a long and well established history of failure.

Way back in 1993, Heritage Foundation scholar Heritage’s Ed Haislmaier was detailing [5] the shortcomings of price controls in health care:

Price controls would not work in health care because they attack the symptoms of runaway costs, not the cause. Medical costs today are soaring because consumers are largely insulated from them…and because the tax system discourages consumers from seeking good value for money in health care.
….
Most policy makers who favor health care price controls view them as a way to curb rapid medical inflation. But most of the blame for that same inflation can be traced directly to previous government health care policies that they support or maintain. Health care price controls also are attractive to Members of Congress because they provide a benefit (cheaper medical care) to a favored constituency (health care consumers) at the expense of less favored constituencies (doctors, hospitals, pharmaceutical manufacturers, and insurance companies). This is why some Members of Congress are so quick to blame the health care industry for escalating medical costs, when in fact it is largely government laws, regulations, and policies that are responsible.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2010/12/24/obamacare-the-price-controls-begin/

URLs in this post:

[1] Image: http://www.foundry.org/wp-content/uploads/DHHS.jpg

[2] announced: http://www.politico.com/news/stories/1210/46678.html

[3] warned: http://www.foundry.org/?p=27384?query=The+President%27s+Health+Proposal:+Bringing+Back+Price+Controls

[4] price control: http://www.econlib.org/library/Enc/PriceControls.html

[5] detailing: http://www.heritage.org/Research/Reports/1993/03/Why-Global-Budgets-and-Price-Controls-Will-Not-Curb-Health-Costs

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