April Fools

“Do you know the hospital has raised the consultation fee for private patients substantially this month?” AC called me last week. “I told the new patients the old rates. Should I call them again?”

To be honest, I received an e-mail about this some time ago but chose to ignore it. The new rates were so ridiculous that I did not know what to do. The e-mail explained that the rates had not been adjusted for a decade but neglected the fact that the original fees were already several times higher than the market rate. I just did not realize All Fools’ Day came so soon.

My recent reading is Justice: What’s the Right Thing to Do? by Michael Sandel. The book began with the story of Hurricane Charley in 2004. In the wake of the disaster, there was widespread price gouging in Florida. A contractor charged $23,000 to remove trees from a rooftop. People had to pay a fortune to stay in motels. Oil and food were sold at unbelievable prices.

Florida has a law against gouging. Not surprisingly, the Florida people filed a number of lawsuits afterwards. Some people disagreed. Thomas Sowell explained that there is no such thing as a fair price. In a free market, price would naturally respond to market conditions. During a disaster, it is better to raise the price. First, this limits wasteful use of scarce resources. Second, suppliers would then be attracted to provide goods and services. It is not unjust but reflects the value buyers and sellers mutually agreed upon. To go one step further, Jeff Jacoby argued that suppressing the price in such a situation would actually slow down Florida’s recovery.

In response, Attorney General Crist stated that such arguments do not apply in times of emergency. Buyers under duress have no freedom. Their purchases of necessities like safe lodging are forced.

Of course, medical consultations are different from services during a natural disaster. They however still have a lot in common. Let’s apply the theories of justice and ponder on two questions first. Should public doctors provide private service? Should doctors be allowed to charge whatever they want?