Timing Error

Politicians just can't keep up with health care markets.

Michael W. Lynch from the July 1998 issue

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At the very time Tyson was developing her inaccurate explanation for health care costs, intense price competition was bringing health costs down. Employers simply wouldn't continue to suffer double-digit increases in health costs, nor would their employees, who preferred such things as salary increases to gold-plated health insurance.

Similarly, as upwards of 80 percent of Americans find themselves in some sort of managed care, that industry is developing products to meet a diversity of needs. Just because Americans don't purchase their own health insurance directly doesn't mean there's "market failure." And just because employers are cost-conscious doesn't mean they have an incentive to cut corners on their health plan. They must ultimately keep their employees happy.

Washington's lawmaking process is cumbersome. By the time laws and regulations are shaped, the information to which they are meant to respond has become outdated. But if government can't keep up with rapidly evolving markets that are experimenting with new ways to deliver products, that doesn't mean policy makers should make the work of markets more difficult.

The health care debate is a striking example of what F.A. Hayek called the "fatal conceit": that statist ideas of rational planning can improve on the collective knowledge of thousands, as expressed through the marketplace. Perhaps health-obsessed lawmakers should study the Hippocratic Oath, which has long enjoined doctors to, "First, do no harm."