New Hampshire Public Radio ran a story yesterday about Governor Lynch's request that hospitals in the state stop building new facilities. Normally, governors never miss an opportunity to encourage new business in their state, because in most markets, greater investment leads to better services or lower prices. Finally, policy makers understand that the normal rules don't apply in health care:
[T]hese facilities are driving up utilization and driving up health care costs. Those are costs that we all see in our ever-increasing health insurance premiums. To that, I say enough.
What is missing from the health care market that causes the rules to be different? There are a number of factors:
The combination of these is so pernicious that the consumer almost never sees the price that will be charged before the service is offered. Even an ambulance chasing lawyer let's you know what you will be paying before he takes your case (e.g. initial consultation is free, we don't collect unless you do). And the combination is such that the Governor is so convinced that unnecessary services will be provided by the new capacity that he would simply rather not have it in his state with direct access to his budget, despite the possibility that some of the additional care will be of value.