Compelling evidence makes the case for a market-driven health care system

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Article Highlights

  • The US doesn't have a private-sector health insurance system, let alone a functioning competitive market for insurance or health services.

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  • The major flaw in such arguments is that the United States is not a competitive market and never really has been.

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  • Health care expenses are random and therefore not predictable.

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Abstract
Through overly restrictive policies, Medicare, Medicaid, and tax subsidies, the federal government has dominated the operation of the U.S. health care system for the past half-century. It is mainly federal policies that are responsible for driving up costs and making health insurance unaffordable for so many Americans. The argument over the future of U.S. health care is essentially an argument over how best to allocate scarce resources in this large and important sector of the national economy. Many economists believe that health care is inherently different from other industries and cannot operate in a traditional marketplace. They argue that governmental regulation, however unsatisfactorily administered, is better than allowing a dysfunctional marketplace to misallocate resources and create inequities. They are wrong. Two health policy analysts explain why the market can not only work in health care but can also provide substantial benefits to the American consumer.

 

Compelling evidence makes the case for a market-driven health care system by American Enterprise Institute

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About the Author

 

James C.
Capretta
  • James Capretta has spent more than two decades studying American health care policy. As an associate director at the White House's Office of Management and Budget from 2001 to 2004, he was responsible for all health care, Social Security and welfare issues. Earlier, he served as a senior health policy analyst at the U.S. Senate Budget Committee and at the U.S. House Committee on Ways and Means. Capretta is also concurrently a Senior Fellow at the Ethics and Public Policy Center. At AEI, he will be researching how to replace the Patient Protection and Affordable Care Act (best known as Obamacare) with a less expensive reform plan to provide effective and secure health insurance for working-age Americans and their families.

  • Email: James.Capretta@aei.org
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    Name: Neil McCray
    Phone: 202-862-5826
    Email: Neil.McCray@aei.org

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