A Question for Obamacare

September 4, 2009

In June President Obama said one of the problems with medical care is that doctors might order higher cost procedures to make more money rather than doing what’s right for the patient. 

I believe he gave an example of this with a doctor recommending a child with chronic sore throats have a tonsillectomy when it’s not needed.

Has anyone considered how the incentives might change if government were to set prices for medical procedures?

If ordering higher cost procedures to make more money were a problem today, though I’m not convinced it is (more on that in another post), I don’t think government price controls would improve the situation.  Rather, it could make it worse as doctors try make up for lost revenue on low government prices. 

And, believing that a government medical effectivness board would be able to control such behavior is naive.  Just consider how hard of a time the government is having processing Cash for Clunkers rebates.  How difficult would it be to process doctor orders which is many times the volume of the Cash for Clunkers?


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