Maryland exceptionalism? All-payers regulation and health care system efficiency.

Medical services, like most services (haircuts, airfares), sell for different prices in the same local market. In contrast to gasoline, where the product is homogeneous and competition prevails, quality is uniform, and consumers are fairly efficient searchers, the medical care market would probably display price variation even if its products were not sometimes a matter of life and death and almost always covered by some thirdparty payer that insulates consumers from knowledge of and concern about prices. Add these special considerations and it is no surprise that we see different prices charged by or accepted by different hospitals or doctors for what appear to be similar products, and even different prices charged by the same firms to different buyers (usually insurers) for apparently the same product. This untidiness causes some concern to economists, but the possibility that it is associated with high levels (or higherthantheyoughttobe levels) of medical spending make it of even greater concern to policy makers, politicians, and even some voters. Establishing an entity that makes sure everyone pays the same price removes the variation (or determines the appropriate level of variation), which may matter to those (usually not economists) who are concerned about equity. More importantly, the hope springs eternal that the entity that reduces variation can also get this uniform price down to the lower end of the range of prices that would