Medical costs and medical markets: another view

by Joseph P. Newhouse

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Comments upon an essay by Keith Leffler in the [Wall Street Journal] entitled "Doctors Fees and Health Costs." Leffler argued that "nearly all facts about the market for physicians suggest a market closely regulated by the classic forces of economics" and that past government interference in the medical marketplace has been responsible for high and rising medical costs. Leffler's suggestion that the supply of physicians merely responds to demand, however, overlooks federal subsidies for medical education. He also does not consider the role of health insurance, which in the hospital sector appears to have considerably stilled the classic forces of economics.

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