Sunday, June 06, 2010

Government Prices Are Market Prices

The government of the US is engineering a shortage of doctors. Read it and weep:

... the Justice Department has unambiguously stated that refusal to accept government price controls is a form of illegal “price fixing.”

The FTC has hinted at this when it’s said physicians must accept Medicare-based reimbursement schedules from insurance companies. But the DOJ has gone the final step and said, “Government prices are market prices,” in the form of the Idaho Industrial Commission’s fee schedule. The IIC administers the state’s worker compensation system and is composed of three commissioners appointed by the governor. This isn’t a quasi-private or semi-private entity. It’s a purely government operation.

What’s more, the Antitrust Division has linked a refusal to accept government price controls with a refusal to accept a “private” insurance company’s contract offer. This lives little doubt that antitrust regulators consider insurance party contracts the equivalent of government price controls — and physicians and patients have no choice but to accept them.

Despite this, Antitrust Division chief Christine Varney, an Obama political appointee, insists she’s trying to protect “competition”:

The orthopedists who participated in these group boycotts denied medical care to Idaho workers and caused higher prices for orthopedic services. Today’s action seeks to prevent the recurrence of these illegal acts and protects Idaho consumers by promoting competition in the healthcare industry.”

The Idaho attorney general compounds the lie:

The free marketplace works best when there is fair competition. Anticompetitive activity harms the marketplace, businesses and consumers. Enforcement of the antitrust laws restores competition to the marketplace to the benefit of businesses and consumers and the marketplace as a whole.
There are two possible outcomes of this:

Government sets prices too high and more producers enter the market and some consumers leave. Or government sets prices too low and some producers leave the market and some consumers enter the market who would otherwise be priced out.

The net result of government efforts is supply/demand imbalances.

There is a third possible outcome: government gets the prices just right and continually adjusts them according to local and general market conditions. What are the odds of that?

A couple of books on the subject of the knowledge problem and market pricing that you might find of interest:

Keynes and Hayek: The Money Economy

Calculation and Coordination: Essays on Socialism and Transitional Political Economy

Update: thanks to commenter S.M. Oliva at the CSM link at the top I have this bit of added information:
By law, the DOJ must file all comments received with the court together with an official reply. The court is then supposed to take the comments and reply into account when determining whether entry of the proposed order is “in the public interest.”

Comments should be sent to Joshua H. Soven, Chief, Litigation I Section, Antitrust Division, U. S. Department of Justice, 450 Fifth St. N.W., Suite 4100, Washington, D.C. 20530. Soven’s fax number is 202-307-5802.

The 60-day clock doesn’t start until the proposed order is published in the Federal Register, which might take up to two weeks.
Do send them a polite note or two. Just to give them something to think about.

H/T Jccarlton at Talk Polywell

Cross Posted at Classical Values

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