In fact, medicare rates serve to protect patients from actual supply and demand equations. ****** This is the very interesting idea I was getting at --- why does a person need to be "protected" from capitalism? According to free market purists (of which I am not) that is 'nanny state' creeping socialism. According to many economists "protection" from market forces is precisely what messes up the system. Of course, another thing that interferes with market forces is the controls on the supply side. Arguably, in the U.S. medicine is 'reserved' for a small carefully managed (quota) class of physicians. There is extreme institutional bias against more cost effective deliveries of care (nurse practioners, physician assistants, prescribing psychologists, midwives, etc.). In the U.S. you tend get a very expensive "doctor" or you get nothing. It certainly helps keep the doctor's salaries up.