Commentary: Regulating Health Care Prices with One Hand Tied Behind Your Back: A Critical Evaluation of a Market-Oriented Proposal

Abstract

Last year in this journal, I offered an explanation for America’s high health care costs rooted in the concept of “supply-side moral hazard,” and advocated for an all-payer system of price regulation as an appropriate policy response. The good news—particularly in the current time of pandemic—is that politicians and health services researchers are beginning to acknowledge the need for some form of price regulation. Legislative proposals thus far have focused narrowly on pharmaceutical prices and “surprise billing” for out-of-network charges. However, a few months ago, in March 2020, three Harvard researchers released a more comprehensive proposal. The bad news is that the proposal would preserve a large role for market forces, which, I argue here, amounts to going into battle against high health care costs with one hand tied behind your back. Furthermore, the reliance on private markets would lock in place the rampant inequality and Byzantine complexity bedeviling American health care.