By Greg Scandlen, senior fellow, National Center for Policy Analysis . The purchasing habits of these companies is important, not only because they provide coverage for more than twenty million employees and tens of millions more dependents and retirees, but also because they are influential models for other purchasers of health care. Health reform within the private sector is often driven by Fortune 500 behavior. As the argument went, doctors were encouraged to perform unnecessary services because they were paid according to the number of services they delivered. The problem is the rush to managed care was based on a fundamental misunderstanding of the causes of health-care inflation.
None are subject to excessive inflation.
One pays a fee for getting a haircut. That price may vary depending on the barber's overhead, the market segment he's targeting, etc. The mere fact that the barber is paid a fee for the service does not mean he can charge an excessive fee, because you would take your business elsewhere. Nor does it mean he can force you to get your haircut weekly instead of monthly, even though he might want to. You would refuse to pay for needless visits.