Does the Government Stifle Competition?

Forbes magazine’s medical industry piece “Cranking Up the Volume” comments on GE’s lobbying efforts for medicare coverage for CT scans enabling sales of CT scanning equipment:

“The party has gone on too long”.

Apparently, excessive coverage for CT scans has led to over doing and “over” covering the scans, thus increasing medical costs:

“Radiologist David Gruen used to spend millions of dollars to replace his General Electric (nyse: GE – news – people ) MRI and CT scanners every three years. It was money well spent because the machines were always busy.”

The economics of this is very interesting: more money for allowable scans leads to buying more equipment which benefits GE. GE lobbys the government to cover scans that arguably aren’t needed. Patients ability to create competition for doctor’s services gets lost in the process. In this case, the government is allowing itself to be influenced by a specific group that ultimately increases medical costs.

Who should police GE and the government on this? Should the medical insurance companies be responsible for keeping the government and companies in check?

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