A front-page New York Times news article is headlined "Most Coronavirus Tests Cost About $100. Why Did One Cost $2,315?" It reports:
How can a simple coronavirus test cost $100 in one lab and 2,200 percent more in another? It comes back to a fundamental fact about the American health care system: The government does not regulate health care prices.
This tends to have two major outcomes that health policy experts have seen before, and are seeing again with coronavirus testing.
The first is high prices over all.
Nope. Not even close. Actually, in much of the American economy, the government does not set prices, and the result is free-market competition and low prices. Think of a fast-food hamburger. In countries, such as the Soviet Union, where the government has attempted to set prices, the results have been shortages, scarcity, and the advent of a "black market" where goods are available at higher than the artificially low government-set prices.
The New York Times is lobbying for government price controls in the form of a news article. If the Times thinks this is such a great idea, imagine how Times management would feel if the government set the prices for newspaper advertising or subscriptions. The Times sells the same news at discounts to educational subscribers and new customers, while charging longtime subscribers and those who aren't associated with educational institutions a much higher rate for the same product. Should that be outlawed? No, it's the most efficient way for the Times' owners to recoup the fixed cost of producing its ideologically biased news report.
The biggest factor influencing healthcare pricing is less the lack of government regulation and more the fact that the person consuming the service usually isn't the one paying. This "third-party payment" structure is itself an unintended consequence of government price controls—World War II-era limits on wages, against which the value of employer-provided health insurance did not count. Granted, health care consumer price-consciousness doesn't always work, especially if, say, a patient is unconscious or so desperately in need of urgent care that shopping around for the lowest price is impossible. But the idea that this is all going to be dramatically improved if only the government would step in and regulate the prices is such nonsense that it's maddening to see the Times promoting it uncritically in a front page news article.
In areas of health care where government is the payer—say, Medicare or Medicaid-reimbursed services—there's already wide variation in prices for the same procedure, depending on, say, whether an MRI happens in a teaching hospital or in a freestanding medical office, or, to put it differently, how influential the lobbyists are for the institution performing the service, or how senior the relevant senators are and what committees they are assigned to.
