Governmental Regulation of Health Care: A Response to Some Criticisms Voiced by Proponents of a “Free Market”

Abstract

In this Comment, the Massachusetts Rate Setting Commissioner takes issue with the criticism of health care cost-containment regulation that was expressed by Professor Clark C. Havighurst in a recent edition of the Journal, and argues that instead of abandoning regulation in favor of various "free market" alternatives recommended by Professor Havighurst, the nation should find ways to make regulation work more effectively in the public interest. The author challenges Professor Havighurst on the ground that he fails to recognize (1) that the free market model is inadequate for evaluating regulatory activity and (2) that regulation is essentially a political process, and therefore regulatory objectives cannot and should not be defined in economic terms alone. What is needed, suggests Mr. Weiner, is acceptance of the need for, and validity of, regulation, and an examination of how regulation can best achieve its economic and political objectives. The key challenge for policy makers in the health care regulatory field, he asserts, is the clarification and implementation of appropriate relationships (1) between health care regulation and health care rationing; (2) between health care regulation and health care planning; and (3) between health care regulation and health care competition.