Enjoy Health Care As a Regulated Utility


President Barack Obama is pushing for health care reform by October. One of his main proposals is the creation of a "public option insurance plan" to keep private insurers "honest." By "honest" Obama means that private insurers would have to compete with the public health plan by keeping their prices as low as the government's plan. So how would the feds keep their prices lo


w? By imposing price controls, explains the New York Times:

To help control costs, the administration indicated support on Tuesday for a proposal to strengthen a federal panel that recommends how much Medicare should pay doctors, hospitals, nursing homes and other health care providers.

Senator John D. Rockefeller IV, Democrat of West Virginia, recently introduced a bill that would expand the role of the panel, the Medicare Payment Advisory Commission, and give its recommendations the force of law. Senators said Mr. Obama and his aides had expressed general support for such a change, which would establish the panel as an independent rate-setting body in the executive branch.

This would basically turn medical care into a regulated utility. In other words, private insurers would have to compete with a government agency that could tell doctors, hospitals, and drug companies how much they are going to get paid, period.

How have price controls worked out in other areas of the economy? Not too well, at least with regard to electrical utilities. As one research report found:

…monopoly regulation appears to have stifled productivity and long-term innovation in the U.S. electric utility sector.

You can be sure that price control regulation will do exactly the same thing to health care innovation and productivity. And for those of you who live in the blessed era of (some) telecommunications deregulation, take a little walk down memory lane to see what it was like to live under the tyranny of the original AT&T with this (not too inaccurate) Lily Tomlin spoof