the Daily Whale - 2 January 1993

Another reason a hospital stay costs so much is that hospitals waste money. Doctors care about lives, and spend money trying to save hopeless cases; they are threatened with malpractice suits, and spend money on needless lab work; hospitals compete by buying $500,000 scanners that they use once a month. In short, the incentive structure is all screwy.

Guess what! All three proposals will change the incentive structure. They’ll do just enough, in fact, to get policy makers off the hook if things go wrong.