This seems like we need similar price caps for healthcare providers, medical equipment providers, pharmaceuticals, etc. Done just in isolation for 1 part of the healthcare industry results in this obvious bad effect.
Removing the rule wouldn't help things.
That would break the system completely. The only reason any of this holds together at all is medical providers shift costs from one patient to another. Medicare doesn't pay enough for the care patients are provided, so hospitals charge private patients extra. If you introduced price caps either hospitals would start to go out of business or they'd stop accepting Medicare entirely.
Price caps always and everywhere cause shortages, including long queues for certain types of care. This may be acceptable but we need to understand the trade-offs when making any changes.
Electric utilities face price caps and there are not electricity shortages.
It depends on the level of market failure, but there are not a ton of hospitals to choose from regardless.
There are electricity shortages.
https://fortune.com/2025/11/10/nvidia-hometown-santa-clara-c...
Electricity price regulation, at least for transmission, has been a thing for states for 100+ years and federally since the 1930s. Pipelines and railroads also have price regulation of some sort.
Monopolies, in these cases natural monopolies, can in fact exist. Look at the Micro supply and demand curves. As a general rule over those 100 years, there has not been rationing of electricity. There are natural blackouts and today an unplanned surge in demand (as happens in every industry such as chips after Covid), but generally the price regulation did not cause some kind of gas lines.
Price caps create shortages when they are the rate limiting factor, which is always the case when imposed on a free market whenever the cap is below the market price, so this is an extremely accurate statement when dealing with things like lightly regulated commodities.
Whether they would be the rate limiting factor in health care remain to be seen, since health care is highly regulated with regulatory capture, licensing, and violence enforced market manipulations. As a thought experiment, in the extreme that health care were a pure monopoly, then I could envision some price caps somewhere between cost and price where the supply curve is relatively flat on either side thus creating minimal effects to supply.
You don't need to waste time with though experiments, you can just look around at various national healthcare systems. Wherever there are price caps, certain treatments have long queues or are simply not available at all. That's why affluent Canadians often come to the USA as medical tourists and pay cash for MRI scans or joint replacement surgery. Every system rations care somehow and price caps aren't necessarily the worst way to do it so let's just be real about the consequences.
Indeed. The US has something around 4X the number of MRI scanners per capita compared to Canada. That’s an insane figure for what has become a baseline diagnostic tool.
Are those market price caps, or are those caps on what the 'single payer' in a 'national healthcare system[s]' is willing to pay? I was under the impression that in these systems, the 'shortage' was created by the fact the single payer was not willing to pay the free market rate that would clear for these services, therefore there is an undersupply of services provided to the 'single payer', not that there was usually an actual market cap.
Typically in these countries you actually can get health care as long as you pay privately yourself and don't go through the 'single payer.' A price cap would mean that no matter how much you're willing to pay, you can't pay over the cap, which is much rarer than the presence of 'national healthcare systems' that merely won't pay over the supposed soft 'cap'.