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Monday, February 22, 2010

Price controls - at best an exercise in naive wishful thinking

Just when I thought that I could not hear anything any more outrageous I read about the latest proposal to reign in health care costs...price controls on insurance premiums!

http://www.nytimes.com/2010/02/22/health/policy/22health.html

Please tell simply ONE historical precedent where this worked? Yes the cost of specific commodities such as electricity and gas may be set within the context of regulated utilities. These entities produce very specific items and are also guaranteed specific rates of return. Unlike electricity or natural gas, healthcare is an undefinable huge basket of services making it neither definable or regulatable. We would be asking for disaster to create such entities and guarantees in healthcare.

Roll back the clock to Diocletion and his price controls and move forward to any Communist entity of the 20th century. They display a perfect record when it comes to the effects of price controls and administratively set prices. Perfectly awful and prefect failures. It may work for political grandstanding but no matter what the intent, it will accomplish nothing but screw the common man and woman by making essential services affordable but unavailable.

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