Brian Holtz in reply to Michael H. Wislon:
Health care is subject to a superfecta of market failures:
- asymmetric information between doctors and patients,
- adverse selection of insurers by insurees,
- moral hazard tempting insurees, and
- free-riding of potential donors leading to the underfinancing of charity healthcare.
However, health care is also subject to massive government failure such as
- tax preferences that artificially bind health insurance to employment, hide costs from consumers, and encourage over-insurance,
- price controls dictated by a bloated mandatory insurance program that (thanks to high senior voting propensity) is funded via inter-generational income transfers,
- laws against interstate competition in health insurance,
- rent-seeking through legislated preferences sought by unions and hospitals and insurers and pharmaceutical patent holders,
- artificial barriers to entry via professional licensure and excessive safety/efficacy regulations, and
- laws preventing insurers and consumers from agreeing on lower-cost lower-coverage insurance.