Comment: Cato expert Daniel J. Mitchell explains why the Affordable Carp Act’s main mechanism, as predicted, has not made care more affordable, but has had quite the opposite effect.
“Simply stated, doctors, hospitals, and other providers have very little market-based incentive to control costs and be efficient because they know that the overwhelming majority of consumers won’t care because they are buying care with other people’s money.”
“To get this point across, I sometimes ask audiences how their behavior would change if I told them I would pay 89 percent of their dinner bill on Friday night. Would they be more likely to eat at McDonald’s or a fancy steakhouse? The answer is obvious (or should be obvious) since they are in box 2 of Milton Friedman’s matrix.”
“So why, then, would anybody think that Obamacare – a program that was designed to expand third-party payer – was going to control costs?”