Friday, September 27, 2013

ObamaCare: A Free Toaster with Every Appendectomy

In the 80's when interest rates were regulated (Regulation Q among others) banks would compete for deposits by offering things like free toasters. As a matter of fact, when wages were regulated during WWII, businesses offered health insurance as a way to compete for workers.

The NY Times pointed out hospitals engage in the same behavior today. The Times doesn't connect the dots, but John Goodman does here, and here. If prices are set, businesses compete on a non-price aspect. For hospitals, the non-price aspect includes amenities, which is the subject of the Times piece.

Expect more of this under Obamacare. When prices are distorted, businesses still compete, just on other non-price items. A free toaster with every appendectomy.


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