Final answer:
The statement that rate control significantly increases the level of capital expenditures by healthcare firms is false. Regulations like those in the ACA are designed to reduce costs over time.
Step-by-step explanation:
One of the major effects of rate control is to significantly increase the level of capital expenditures by healthcare firms. This statement is generally considered false. The Affordable Care Act (ACA), designed to control increases in healthcare costs, introduced regulations such as a cap on the amount that healthcare providers can spend on administrative costs and the requirement for healthcare providers to switch to electronic medical records (EMRs).
These regulations were aimed not at increasing capital expenditure but at reducing administrative costs and improving efficiency within healthcare organizations. While it is true that the transition to EMRs might involve an initial increase in capital spending, the overall intent and effect of rate control through regulation like the ACA is to reduce expenditure over time by streamlining operations and cutting down unnecessary costs. It may create short-term investments but is expected to lead to long-term savings.