How regulations can unintentionally drive up the costs of health care

Regulations so often assume that people won't change their behavior. The regulations in this case weren't done with the best of intention, the changes were done to reduce the attractiveness of flexible-spending accounts, something that Democrats have disliked for years. Here is one regulation that has clearly backfired. From the WSJ:

Sandy Chung is grappling with a new kind of request at her pediatrics office in Fairfax, Va.: prescriptions for aspirin and diaper-rash cream.

Patients are demanding doctors' orders for over-the-counter products because of a provision in the health-care overhaul that slipped past nearly everyone's radar. It says people who want a tax break to buy such items with what's known as flexible-spending accounts need to get a prescription first.

The result is that Americans are visiting their doctors before making a trip to the drugstore, hoping their physician will help them out by writing the prescription. The new requirements create not only an added burden for doctors, but also new complications for retailers and pharmacies.

"It drives up the cost of health care as opposed to reducing it," says Dr. Chung, who rejected much of a 10-item request from a mother of four that included pain relievers and children's cold medicine.

Though the new rules on over-the-counter drugs amount to a small part of the massive overhaul of the health-care system, the unintended side effects show how difficult it can be to predict how such game-changing legislation will play out in the real world. . . .



Blogger Unknown said...

I very much agree, regulations and government subsidies do increase the prices, not only in health care but also in the Real Estate markets and for Education, etc.

With health care it didn't just start, health care in the US took a turn for the worse with the passing of the HMO Act in 1972. That was a very anti-free market policy as the HMO system gained market share through the government imposition, not by means of increased competitiveness and better quality health care through free market economics.


3/09/2011 2:35 AM  

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