Suppose Senator Big Government seizes control of the federal government and nati

Question

Suppose Senator Big Government seizes control of the federal government and nationalizes the health care market. As one of his signature proposals to improve the quality of medical care, he proposes a minimum or “living” wage for all hospital workers of $100 per hour, with workers working only 30 hours per week, 50 weeks per year. By all hospital workers, he means all hospital workers, from the cafeteria worker to the emergency room physician.

A . From the perspective of the patients, what are the implications of this law? That is, what could go wrong? What could go be the benefits?
B . From the perspective of the payers (that is, tax-payers, third party insurers, and self-paying patients) what are the implications of this law? What could go wrong? What could be the benefits?
C . What could be the consequences to society as a whole? Would medical care improve simply by increasing payments to providers?

Explanation / Answer

A. From the perspective of the patients, the results would be catastrophic. With hospital workers working only 30 hours per week i.e. approximately 4 hours per day, the care offered at hospitals will be seriously compromised. How will it work anyway? With workers working only 4 hours a day, who will provide round the clock care to the hospitalised patients? There are no benefits to the patients.

B. From the perspective of the tax payers from whose pockets this law will be financed, its again a bad policy. The minimum wage is too high and the hours required are too low. The cost of healthcare will shoot up drastically due to this law. There are no benefits for the tax payers as their hard earned money is being wasted in the name of providing quality healthcare.

C. The impact on society would be negative because affording healthcare would be quite costly now. The incentive for workers will fall as the minimum wage is already too high and they are required to put in only 4 hours in a week. The correct incentive is missing for improving quality. Also, round the clock care has been compromised as even the nurses are included in the policy.

The idea of increasing payments to the providers shouldn't come at the cost of providing bare minimum services to the people.

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