Home > Obamacare > How to Reform the Health Care and Insurance Markets

How to Reform the Health Care and Insurance Markets

The court case litigated at the Supreme Court last week regarding the Patient Protection and Affordable Care Act has again focused the public’s attention on not just the merits of this law (aka Obamacare) but also on alternatives to Obamacare that might be implemented. I have written on this blog that there is much about Obamacare that provides the wrong incentives in the health care market and the law exacerbates the financial problems facing the U.S. government. An interested reader might ask “Well, if you don’t like Obamacare, what would you recommend to reform the health care and insurance markets?” This is a good question and economist John H. Cochrane has provided an answer to this question.

Professor Cochrane is on the faculty of the business school at the University of Chicago (his faculty web page may be found here). He recently wrote a piece in a popular news outlet regarding his views about how an economist would want to reform the health care and insurance markets. This is reading that I highly recommend and you will see that many of the problems observed in the health care and insurance markets are products of the central planning done by state and federal governments.

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  1. Jason Reed
    April 5, 2012 at 9:27 AM

    I understand that deregulation will help to reduce some of the welfare lost due to government intervention. But John’s answer of cash and carry, fails to adequately address the problem of chronic care or especially costly procedures. By opening up competition among doctors and hospitals, micro economic theory would tell us prices should fall and the available quantity of healthcare should rise. Yet, what about the most costly procedures? Even though prices may fall, they might not fall far enough. Shouldn’t we have some price ceilings or some form of mandate for these scenarios?

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Economics One

A blog by John B. Taylor

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