Question

Unintended consequences of price controls are often misinterpreted or ignored by proponents of such controls because the effects take a few years to work through the health care system. True or False

Answer 1

Correct Answer:
True

Due to the price control, there is a short term benefits as the cost of health care is kept under the control. People pay less for the services. But, it discourages the firms and supply of health care services decreases at reduced prices. Besides, there is a lesser incentive upon the innovation and R&D work. As a result, the new advancements don’t take place on a regular basis. It negatively affects the health care industry and people who need the new advancements in the better management of their health. Though, these negativities develop over the years, so the proponents of the price control, often ignore it.