Perversity

Periodically, Krugman reminds us that Kenneth Arrow showed that market-based systems can't work efficiently as health care delivery mechanisms. Over at the Great Orange Satan, Mcjoan gives an object lesson. For Medicaid, and the health care system as a whole, a key element in cost control is minimizing ER admissions.

For private sector hospitals, ERs are a profit center:

Efforts to reduce unnecessary ER visits by patients in Medicaid, the joint state-federal health program for the poor and disabled, are proliferating as states search for ways to control the soaring costs of the program. But state officials complain that their efforts are sometimes hampered by hospitals’ aggressive marketing of ERs to increase admissions and profits.

"Many hospitals are actively recruiting people to come to the ER for non-emergency reasons," said Anthony Keck, South Carolina's Medicaid director, citing facilities that tout their speedy ER service on highway billboards. "When you are advertising on billboards that your ER wait time is three minutes, you are not advertising to stroke and heart attack victims," he said.