Sunday, September 27, 2009

Health Care Reform: Essential Economic Insights

According to provisions in both House and Senate bills, mandated plans must have low copayments and provide coverage of health-care services that is at least equal in scope to a typical, current employer-sponsored plan. But these are the very flaws that are responsible for high and rising health-care costs, flaws that stem directly from the misguided tax exclusion for and the extensive state regulation of health insurance. By locking in these flaws, the mandates will inhibit precisely the innovation needed to reform U.S. health care....Comprehensive, low-deductible, low-copayment insurance has brought us to where we are today. The administration's plan to expand and lock-in this flawed paradigm will ultimately defeat the goal of making health services more affordable for everyone.
If one wants to use government and public policy to "solve" a "problem," then it seems to make good sense to first understand the cause of the "problem." These 3 economists understand the sources of the health care problem today are past government policies. Thus, government actions today that do not correct the past bad government policies, even more that lock in the past bad policies, should not be expected to lead to better results in the future.

[HT: Greg Mankiw]

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