1. An Economic Perspective
Health Policy Issues
An Economic Perspective
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2. Can Price Controls Limit Medical Expenditure Increases?
Chapter 18
Can Price Controls Limit Medical Expenditure Increases?
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3. LEARNING OUTCOME
Examine the potential consequences of price controls and global budgets as approaches for limiting rising medical expenditures
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4. Lecture Effect of Price Controls in Theory
Imbalances Between Supply and Demand
Service Shortages
Shift of Capital Away from Price-Controlled Services
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5. Lecture (continued) Effect of Price Controls in Practice
Medicare
Medicaid
Rationing
Waiting Lists
Deterioration of Quality
Gaming the System
Global Budgets
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6. Discussion
What is the impact of price controls on capital investment by hospitals?
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7. Summary
Price controls and global budgets provide the appearance of limiting rising prices and expenditures, but in reality, they
lead to cheating and a reduction in quality,
impose large costs on patients and providers, and
do little to improve efficiency.
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8. Summary (continued)
Consumers and producers respond to prices, so when government sets prices below costs, hospital and physician economic incentives are to reduce the supply of their services. If the purpose of regulation is to improve efficiency, eliminate inappropriate services, and decrease the costly duplication of medical technology, government policies should provide incentives to achieve these goals.
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9. Summary (continued)
Competitive systems provide both purchasers and providers with incentives to weigh benefits and costs of new technology. When patients are willing to pay, medical expenditures will increase faster, but the rate of increase will be more appropriate.
Copyright © 2015 Foundation of the American College of Healthcare Executives. Not for sale.