Instead of using market-based arrangements that pressure providers to deliver more while charging less, our insurance-dominated, politically controlled payment system does the exact opposite: it rewards providers for delivering less while charging more. A thicket of government regulations then makes things even worse, stifling competition from new entrants that might seek to attract customers by offering better terms.
Price controls may seem like an appealing solution but the history of price controls, dating back more than 4,000 years, provides abundant evidence that they do not work — and often make things worse. As the economist Thomas J. DiLorenzo writes, price controls cause “shortages, sometimes of catastrophic consequence; deterioration of product quality; the proliferation of black markets on which prices are actually higher and bribery is rampant … and a dangerous concentration of political power in the hands of the price controllers.” Do Californians really want to try and approach that has failed every time it has been tried?