You’ve heard of the third-party problem in health care? Actually, it’s worse, say Charles Kroncke and Ronald F. White, who write in the journal of the Independent Institute. We’ve got a four-party system:

  • Patients (who want health care services)
  • Physicians, doctors, drug companies and others (who give treatment)
  • Insurance companies and government programs (which pay the bills)
  • Employers (who select the insurance that most of us have)

The authors argue that America’s “awkward flirtation with the marketplace” “more closely resembles corporate welfare than an experiment in free-market medicine.” The Independent Institute offers the following tease:

Despite numerous federal interventions that have favored health care providers and insurers, the industry has yet to figure out how to overcome the problems of adverse selection, moral hazard, information asymmetry, and free-ridership. Did it ever make sense to create a health care system in which fourth-party employers purchase insurance for their first-party employees from third-party corporations, which in turn pay second-party providers for health care products and services?

Cross-posted from State House Call.

Stay Engaged

Receive our weekly emails!


Related Articles:

Worker’s Choice: Freeing Unions and Workers From Forced Representation

How Pensions Are Bankrupting Cities and States and How to Fix It

Legacy Society

Study: $15-An-Hour Minimum Wage Would Kill 281,000 Michigan Jobs

Michigan and Ontario Governments Agree to Promote Crony Capitalism Together

Charter School-Prison Comparison Misses the Mark