Monday, September 25th, 2017

Price controls are a bad ideal?

April 28, 2011 by  
Filed under News & Information

One of the reasons for the popularity of price controls  is a confusion betweenprices for sevices and the cost to deliver them. For example, politicians who say that they will” bring down the cost of medical care” almost invariably maen that they will bring down the prices paid for medical care. The actual cost of medical care- years of training, resourses needed to build and equip offices and hospitals,the hundreds of millions of dollars for research to develope a single new medicine- are unlikely to decline in the slightest. Those items are never addressed by the politicians. When they reduce the price of medicine and the fees charged by doctors, they call this cost reduction. These controls have a negative effect not a positive effect. Existing medicines do not vanish under price controls but new medicines to deal with cancer, alzheimer’s and numerous other diseases are unlikely to get funded since there will no longer be any money for research and developement. But this will take years to unfold and most people will not connect the bad consequences they experienceto the popular policies they supported some years back. The person in office at that future date will get the blame ,not the current office holders. You need to think hard about control by government because it has resulted in negative consequences almost every time because it violates normal economic rules. If you control the price you must control the demand, so what will result is healthcare rationing decided by someone in Washington, who is totally out of touch with you the person in need. One way to decrease the demand for a lower price is to reduce the number of people who can have the service at that reduced price. Do you want to be that person? Think hard and deep on this before it is to late. Once a government control is instituted ,it never comes off ( or at least rarely).