Provider-Driven Health Care Regulation
By Arnold Kling
in the late 1990s HMOs throughout the State panicked at the prospect of losing their patients to Internet physicians. Pharmacists panicked at the prospect of Internet pharmacies taking their business.
So the Medical Board of California was pressed into action. There is absolutely no evidence that medical diagnosis and treatment via the Internet is more dangerous than it is in other settings. Research shows that, because of computer assistance, the adverse drug reaction (ADR) rate for Internet prescribing is considerably lower than the ADR rate experienced in physicians’ offices and hospitals. Nevertheless the Board was compelled to declare Internet physicians and Internet prescribing a threat to public safety.
With medical trade groups and others in the California healthcare industry, they launched a propaganda campaign to discredit Internet medicine almost before it could get started. The Board gave false testimony to the California Legislature (nothing too unusual about this) and successfully lobbied for laws outlawing Internet medicine. These laws were passed and went into effect January 1, 2001. These laws deny California healthcare consumers access to safe, effective, convenient, and less costly health services while protecting the profits of big intra-state healthcare providers.
Although Jones is a bit of a ranter, I think that the issue of regulatory capture is an important one. That is, most health care regulation is undertaken to protect provider rents, with consumers acting as stage props.
It seems plausible to me that the fundamental reason that health care and higher education are as expensive as they are is that the providers control the accreditation process. With government subsidizing demand and the providers restricting supply, conditions are ideal for increasing rents.
For Discussion. Are providers in health care and higher education better able to restrict supply than in other industries? If so, why?