Thursday, March 1, 2012

Harnessing Market Forces to Achieve Quality and Promote Innovation

Maybe they'll put up a
plaque honoring Mr. Obama?
The health care newsie Disease Management Care Blog thought it had seen it all.  Now this.......

In a striking policy about-face, the Obama Administration has adopted a market-based approach to setting prices and controlling utilization. Everyone agrees that letting prices rise in response to demand disproportionately harms lower income Americans. We also know it's another drag on an already fragile economy. Last but not least, it's vexing the President's political base. 

Nonetheless, the Administration is being resolute. Putting political expediency aside, the White House has courageously put their faith in an unabashed conservative philosophy by arguing that long-term benefits of higher prices will ultimately pay dividends in wise consumerism, innovation and quality.


As a result, the White will House forgo any "demand" or "supply" side interventions.  There will be no price regulation based on prevailing costs and projected outcomes. They'll spurn the suggestions of myriad legal, economic and regulatory expert panels.  They'll resist activist calls to expand the role of the Federal government. 

Politics?  Sure, but the machinery in West Wing knows how to manage that. They know a normally friendly news media will report some inflammatory anecdotes about how low income Americans are being forced chose among life's other basic necessities. They'll just ride out the news cycle and counter with populist attacks about "profits" and "fat cats" and "corporate jets."  While the messy politics sort themselves out, Mr. Obama has faith: supply, demand and the marketplace will take us where we need to be.

Is this about health care you ask?  Hardly.  Education?  Nope.  Housing? Negative. The Disease Management Care Blog points out that this is the Administration posture on an arguably equally important part of our collective national well-being: transportation and energy prices.  Mileage standards and Detroit bail-outs aside, The DMCB thinks this is quite a reversal.

A harbinger of things to come?  We can only hope. 

Image from Wikipedia

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