Price Controls in Healthcare – The Start of Rationing

For those of you too young to remember, signs like the one to the left were common in America in the 70’s when President Nixon imposed price controls on gasoline. I was young, but I remember it.

My parents were only allowed to get gas on certain days of the week and they had to wait, sometimes over an hour in line to fill-up. Sometimes you couldn’t get gas which caused many people, like my parents, to bring gas cans to the station to stockpile gas at home when there was no gas available anywhere.

In the history of the world dating back to ancient Rome, price controls have never worked. They have led to rationing which leads to signs like this one. Now we get to see the ugly monster of price controls return to America, but this time in healthcare.

How would you feel if you saw a sign like this outside your Doctor’s office when you got sick? Well, rationing much like this is coming because the recent healthcare bill passed by Congress is much like the one in Massachusetts and Massachusetts just rejected 235 of 274 proposed insurance rate increases because the politicians there said the proposals, “included ‘excessive increases and rates unreasonable relative to the benefits provided.'”

In other words, they felt the companies are charging too much for certain medicines or medical procedures. That means you can’t get them, even if your life depended on it, even if you were willing to pay for it yourself…your Government says no.

By rejecting the rate increases, Massachusetts has created price controls. Price controls lead to rationing where only a limited amount is available at any given time, no matter how high the demand or how much someone is willing to pay. Rationing leads to shortages where even those most desperate for it, can not find it. Shortages lead to signs like this one. Only this time around, instead of gas not being available at all, or only on certain days…medicines and medical procedures that could save your life will not be available at all, or only to certain people…which inevitably means…someone has to die. Many will die.

I’m not being dramatic or a sensationalist. This is the simple, cold, “hard to swallow” truth.

And let’s not forget, as you may have read in my last post, that all of our wonderful politicans have exempted themselves from this federal healthcare plan. So while they will deny a life saving procedure to you because they believe it too expensive, they will always have access to it.

Since the federal healthcare plan recently passed by Congress is based on the same principles as the Massachusetts one, expect price controls, rationing and shortages of healthcare to come to a hospital near you in the near future.

To understand a brief history of the absolute failure of price controls, click here.

To read a great article by economist Thomas Sowell on the gas shortages in the ’70’s and why price controls lead to shortages, click here. And of course, I have several of his books on my sidebar you can read as well.


Some excerpts from Making Economic Sense by Murray N. Rothbard…

“Price controls cause shortages of health care.  In fact, they [government] welcome the prospect, because then they can impose rationing; they can impose priorities, and tell everyone how much of what kind of medical care they can have.”

“C. Jackson Grayson, who headed Nixon’s price-wage control experiment from 1971 to 1973, warns: ‘price controls will make things worse.  Believe me, I’ve been there. …Controls have not worked in 40 centuries.  They will not work now.'”

“Price controls, that is, the fixing of prices below the market level, have been tried since ancient Rome; in the French Revolution, in its notorious “Law of the Maximum” that was responsible for most of the victims of the guillotine; in the Soviet Union, ruthlessly trying to suppress black markets.  In every age, in every culture, price controls have never worked.  They have always been a disaster.”

“In 1946, all federal price controls had been lifted except on meat, and as a result, meat was in increasingly short supply.  It got so bad that no meat could be found, and diabetics could not even find insulin, a meat-derived product.” Then the Government, headed by President Truman, “reluctantly concluded that there seemed to be only one course left to him: to abolish the price controls on meat, which he proceeded to do.  In a couple of days there was plenty of meat for consumers and the diabetic alike.  The meat crisis was over.  Prices?  They did not, of course, go up to infinity.  They rose by something like 20% from the unrealistic control level. The most remarkable part of this affair went unremarked: that President Truman, apparently without knowing it, had conceded the crucial point: that the “shortage” was, pure and simple, an artificial creation of his own price controls.”

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