Constitutional Limits on Physician Price Controls

Although the federal government has the power to impose price controls on physicians, this does not mean that the Constitution has nothing to say about what form such controls take. This Article argues that the Takings Clause and the Due Process Clause impose limits on physician price controls analogous to those that apply to price controls on regulated public utilities. Physicians, like public utilities, make extensive investments in specific capital that cannot be transferred to an unregulated market. Thus, a physician's investment in medical education, training, and equipment is vulnerable to expropriation through price controls.

Three important constitutional limits follow from this. First, any price controls must be set at a level that insures physicians an opportunity to earn a fair return on their investment. Second, although physician price controls may be set on a group basis, the nonfungibility of medical services means that a highly differentiated scheme of group prices must be established, and that individual physicians must be allowed to seek exemption from group prices. Third, physicians must be given expedited individualized hearings on such requests for exemption.

The additional administrative costs associated with these constitutional limits are another reason to question the wisdom of trying to control medical costs through price controls.