The Economics of Health Care and Health Insurance

Almost everyone agrees that the status quo in the markets for health care and health insurance is suboptimal with respect to (a) access to health care and health insurance; (b) affordability to individuals and cost to taxpayers; (c) the unfortunate connection of health insurance to employment -- and thus, problems with portability; and (d) inequities in the available subsidies. To deal with some of these problems, recent reform efforts -- most notably, the Affordable Care Act of 2010 (called "ObamaCare") -- have focused almost exclusively on dramatically increasing government involvement. The political debate on health care and health insurance often begins with the assertion that both now operate as "free markets." This claim is easy to refute by pointing to the proportion of spending in the health care sector by the government and the scope of government regulation in each arena.