Economic theory suggests that controlling health-care costs through rules and regulations imposed by the government or another third party is generally
A) more effective than using competition and the choices of consumers spending their own money to control costs.
B) less effective than using competition and the choices of consumers spending their own money to control costs.
C) only workable if the entire health-care sector is socialized (operated by the government).
D) possible to implement successfully because these rules and regulations tend to be in harmony with the interests of both consumers and health-care providers.

Question

Quizplus · Accepted Answer

Economic theory suggests that competition and the choices of consumers spending their own money are more effective in controlling costs than government regulations. This is because in a competitive market, providers have incentives to reduce costs and improve quality to attract consumers. Consumers, in turn, have the power to make choices based on their preferences and budgets, which puts pressure on providers to offer value for money. Government regulations may create unintended consequences, like reducing the incentives for providers to offer high-quality care or decreasing access to healthcare for some consumers.

Economic Theory Suggests That Controlling Health-Care Costs Through Rules and Regulations