Price Ceiling Case Study

1391 Words6 Pages
III. Theoretical Effects of Price Ceilings

Each stakeholder is affected differently in this scenario; consumers should be better off due to decreased prices, yet other consumers would be worse off because they would be denied access to health care. Japan mandates that everyone has access to healthcare, so in reality they would not be denied care, but may face significant challenges such as long waits for consultations and surgeries. Producers would be worse off because of the revenue loss mentioned in the previous section. This may lead to lower wages for doctors, nurses, pharmacists, surgeons, and other members of the medical profession, and may also lead to the future medical workforce decreasing. This may decrease demand for medical
…show more content…
However, this is not unanimously agreed upon; Rouse and Surban (58) cite numerous sources contradicting this. Brostoff’s 1993 study, presented by Rouse and Surban, into the effects of health service price controls suggests that costs inflate rather than deflate. This could be due to a number of reasons; primarily, it is possible that producers are focusing on a larger quantity of services, rather than the quality of these services. Rouse and Surban (58) cite another study in support of this argument, saying that the likely reaction would be to bundle “additional high-margin services (e.g., tests) along with the service for which the price is…show more content…
White, of the Institute for America’s Future, matches economic theory in suggesting that there are, simultaneously, numerous benefits to be had. His argument seems to go against Brostoff’s statement suggesting that costs will inflate; rather, White says that costs will deflate not because of a push for efficiency but instead due to lower administration costs. He reasons that varied pricing leads to greater administrative costs and that “excessive payments lead to purchase of excess equipment which can then lead to excessive volume.” Furthermore, price controls, according to White, should lead to better cost control and benefit consumers as a collective stakeholder: they should witness greater transparency and accountability as health service providers have publicized pricing procedures. It is also seen to permit better research on care, practice, and resource usage patterns, although these are likely to change with the implementation of a price ceiling. White is, however, a source to be cautious of, as the Institute for America’s Future also has political leanings likely to cause a bias in the works it

More about Price Ceiling Case Study

Open Document