Sunday, March 13, 2011

In almost every instance, free market solutions work to solve problems in our society. The converse is when government gets involved, there is nothing but problems and failure. So logically, what is the point to increasing the size of government? Why would we do this knowing we are asking for more failure?

Common sense dictates less government involvement in our lives and more free markets to solves most of our problems.

Market Solutions to Health Reform
Source: D. Eric Schansberg, "Envisioning a Free Market in Health Care," Cato Journal, Winter 2011.

Government has become increasingly active in regulating and financing health care over the last 40 years -- increasing health care spending from 25 percent to more than 50 percent of overall spending. This increased intervention has led to higher, not lower, health care costs. The tendency to underestimate the costs of government intervention introduces a serious problem for advocates of more government control of health care, says D. Eric Schansberg, a professor of economics at Indiana University Southeast.

So, what would it look like to have less government involvement in health care? Schansberg recommends, among other things :

End, or at least reduce, the subsidy for health insurance obtained by workers through their employers.

Eliminate payroll taxes on health savings account (HSA) contributions, allow HSAs to be used to pay insurance premiums and allow contributions to HSAs after age 65.

Dramatically reduce insurance regulation.

And repeal or replace labor regulations that unduly restrict the provision of health care services by trained medical personnel who are not doctors.

It is increasingly obvious that government solutions to health care are not effective. People often find market outcomes appealing. Proponents of free markets in health care should work to make the most persuasive case for real reform and to achieve incremental reforms where possible, says Schansberg.

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