Submission + - How the government's hospital protection racket drives up costs (nypost.com) 1
This arrangement has also led hospitals to upgrade costly high-tech capabilities, yielding widespread overcapacity and ever-increasing prices.
This widespread excess capacity isn’t the product of free-market forces but results from years of state interventions intended to support hospital revenues. Early Blue Cross health insurance plans were developed by the American Hospital Association to accommodate rather than to constrain the growth of hospital costs, and the AHA secured tax and regulatory policies to foster their expansion.
But voters treasure local hospitals, regardless of their inefficiency. As insurers sought to drive down prices, by threatening to leave expensive hospitals out of their networks, legislators imposed regulations that restrict their ability to do so. They have also enacted “certificate of need” laws to prevent specialty hospitals from emerging to undercut them on price. Community hospitals have also been given lucrative exemptions from taxes, and 91% receive special add-ons to Medicare rates.