Regulation Misses the Big
Larry S. Gage
The debate over health industry regulation reminds me of an old “Peanuts” cartoon. Lucy is bent over examining an object on the sidewalk. “This is a rare butterfly from Brazil, ” she informs Linus. “You don't see many of them in this part of the world.”
“That's a potato chip, ” Linus points out. “Hmmm, you're right, ” says Lucy, now looking more closely. “I wonder how this potato chip got here from Brazil?”
From the vantage point of America's safety-net hospitals and health systems, the debate over regulation of managed care is rather like Lucy's effort to find meaning in a Brazilian potato chip. Although some observers see virtue (largely defined as the lowest possible price) in a free and unfettered marketplace, others argue that health care defies normal economic principles and must be regulated as an essential human good. But the purists on both sides seem to be discussing the health system of a country with which I am unfamiliar.
For example, the American Association of Health Plans developed an exquisitely labyrinthine chart purporting to illustrate the many
The author is indebted to Lynne Fagnoni, chief financial officer, and Jennifer Tolbert, analyst, of the National Association of Public Hospitals and Health Systems, for their assistance in preparing this chapter.