In 2006, Massachusetts (with Mitt Romney as Governor) passed a health reform law that shares many of the features of the U.S. reforms recently passed in Congress and signed by President Obama. The op-ed piece linked below suggests that when “market failure” meets “regulatory failure” the results will be ugly.
Come to Econ Tea on Monday to discuss this topic.
- Asymmetric information and poor incentives cause private markets to work poorly.
- Collectivized markets (and strict regulation) poorly serve the public when there exists a wide range of preferences.
- Exchanges (which Alain Enthoven once called managed competition) “can” work but only if they don’t fall into the traps provided by 1 and 2 above.