Screwing Up Healthcare with Government-Created Third-Party Payer

In addition to speaking on tax competition at the European Resource Bank in Moldova, I also appeared on a panel about healthcare. I used the opportunity to explain how government-created “third-party payer” has crippled market forces in the United States and produced inefficiency and needlessly high costs. There are two visuals from my presentation I […]

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Government-Subsidized Third-Party Payer Is a Great Recipe to Make a Sector of the Economy More Expensive and Less Efficient

What’s the most effective way of screwing up a sector of the economy? Since I’m a fiscal policy economist, I’m tempted to say that bad tax policy is the fastest way of causing damage. And France might be my top example. But other forms of government intervention also can have a poisonous effect. Regulation, for […]

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Subsidies and Third-Party Payer = Inefficiency and Higher Prices

People sometimes think I’m strange for being so focused on the economic harm that results from third-party payer. But bear with me and we’ll see why it’s a very important issue. If you’re not already familiar with the term, third-party payer exists when someone other than the consumer is paying for something. And it’s a […]

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Birth Control, Third-Party Payer, and the Politicization of Health Care

America’s health care system is a mess, and we can assign almost all the blame on government. Simply stated, we don’t have functioning and efficient markets because Medicaid, Medicare, tax-code distortions, and other forms of regulation and intervention have created a system that is crippled by a third-party payer crisis. There’s no logical reason to […]

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The Higher-Education Bubble and Third-Party Payer

Taxes and spending are two of the most obvious burdens imposed by government, and I’m glad that many people are fighting against a political class that seems to have a limitless appetite for a bigger public sector. But politicians also can do great damage to an economy with mandates, regulations, and other forms of intervention. […]

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Government-Created Third-Party Payer Is the Number One Problem in America’s Health Care System

John Goodman of the NCPA has a great article about how the current healthcare system is heavily distorted by government policies that result in people making decision with other people’s money (or at least what they perceive as other people’s money). The excerpt below is a good summary of John’s key points, but I’ll add […]

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Abortion, Third-Party Payer, and the Cost of Health Care

A major problem with America’s healthcare system, both before and after Obamacare, is the fact that consumers very rarely spend their own money when obtaining healthcare. Known as third-party payer, this problem exists in part because government directly finances almost 50 percent of healthcare expenditures. But even a majority of supposedly private healthcare spending is […]

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Taxpayers Are Getting Drowned by Government-Subsidized Flood Insurance

Government subsidies have an unfortunate habit of causing widespread economic damage and often result in huge burdens for taxpayers (though sometimes consumers are the ones getting pillaged). Fannie Mae and Freddie Mac subsidies contributed to a massive housing bubble that destabilized the entire financial system. Means-tested subsidies have undermined progress on poverty by trapping people […]

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Clinton and Trump (Clump?) vs. Taxpayers and Free Enterprise

When Donald Trump and Hillary Clinton agree on things, it’s always bad news for taxpayers. They both want to boost the capital gains tax rate on private equity investment. They both want to let the entitlement problem fester and worsen. They both want more federally financed pork-barrel spending on infrastructure. Now they both agree that […]

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Instead of Fighting to Protect Taxpayers, Politicians Are Enabling Medicare Fraud

Yesterday, I shared several stories that exposed the festering corruption of Washington. Today, let’s look at one issue that symbolizes the pervasive waste of Washington. Medicare is the federal government’s one-size-fits-all health program for the elderly. Because of its poor design, it bears considerable responsibility for two massive problems. It contributes to the systemic third-party […]

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The Left’s Pro-Single Payer Health Care Graphic: Right Diagnosis, Wrong Prescription

The new leftist website, Vox, has an article by Sarah Kliff on Vermont’s experiment with a single-payer healthcare system. But I don’t really have much to say about what’s happening in the Green Mountain State, other than to declare that I much prefer healthcare experiments to occur at the state level. Indeed, we should reform […]

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Taxes Are Unpleasant and Obamacare Is Awful, but there’s a Strong Case for the Cadillac Tax

When I followed public policy in my younger days, I periodically would see stories about legislation that was approved by the House of Representatives with only one dissenting vote. My memory isn’t perfect, I’m sure, but it seems that Ron Paul was always that lonely member. And my recollection is that he was (as usual) […]

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The Middle Class in America Is Benefiting from “Almost Capitalism”

The candidates for the 2020 Democratic nomination are competing to offer the most statist agenda, with Crazy Bernie, Elizabeth Sanders, and Kamala Harris being obvious examples. But let’s not overlook Mayor Pete Buttigieg. He has a moderate demeanor, but he’s been advocating hard-left policies. And he justifies his class-warfare agenda by arguing against Reaganomics and […]

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“Medicare for All” Would Copy the Bad Features of the U.K.’s Government-Run System

The so-called Green New Deal is only tangentially related to climate issues. It’s best to think of it as the left’s wish list, and it includes a paid leave entitlement, government jobs, infrastructure boondoggles, and an expansion of the already bankrupt Social Security system. But the most expensive item on the list is “Medicare for […]

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Subsidies for Higher Education Are Emptying the Pockets of Students and Lining the Pockets of Bureaucrats

I’m not as eloquent on the issue as Professor Daniel Lin, but I recently explained on Fox Business that government subsidies for higher education have enabled big increases in tuition, an outcome that has been good for bureaucrats and bad for students. In effect, this is simply a story of “third-party payer,” which happens when […]

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Trump and the Economy

In a recent interview, I got a chance to pontificate about the recipe for growth and prosperity. Free market capitalism revolutionized the western world, creating prosperity where there used to be deprivation. But that observation is the easy part. Later in the interview, I was asked to give my two cents on whether Trump’s policies […]

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The Pernicious Impact of Government Intervention in Healthcare, Captured in a Chart

America’s healthcare system is a mess, largely because government intervention (Medicare, Medicaid, Obamacare, and the tax code’s healthcare exclusion) have produced a system where consumers almost never directly pay for their medical services. This “third-party payer” system basically means market forces are absent. Consumers have very little reason to focus on cost, after all, if […]

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The Upside-Down Logic of Subsidized Birth Control

When writing about the Obamacare and its birth-control mandate, I’ve made a handful of observations. First, it is very bureaucratic and inefficient to use insurance for routine medical expenses. Sort of like using auto insurance to cover the cost of getting an oil change. Second, insurance coverage means third-party payer, which means birth control will […]

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In One Image, Everything You Need to Know about Health Insurance, Community Rating, and Pre-Existing Conditions

When discussing government involvement in the health sector, I usually focus on the budgetary implications. Which makes sense since I’m a fiscal wonk and programs such as Medicare, Medicaid, and Obamacare are diverting ever-larger amounts of money from the economy’s productive sector. I also look at the tax side of the fiscal equation and complain […]

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The Congressional Budget Office’s Questionable Analysis of Obamacare Repeal

Back in 2015, I basically applauded the Congressional Budget Office for its analysis of what would happen if Obamacare was repealed. The agency’s number crunchers didn’t get it exactly right, but they actually took important steps and produced numbers showing how the law was hurting taxpayers and the economy. Now we have a new set […]

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The Federal Tax Code Should Not Subsidize Greedy Politicians in New York and California

If I had to pick my least-favorite tax loophole, the economist part of my brain would select the healthcare exclusion. After all, that special preference creates a destructive incentive for over-insurance and contributes (along with Medicare, Medicaid, Obamacare, etc) to the third-party payer crisis that is crippling America’s healthcare system. But if I based my […]

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Can Corporate Rate Reduction Save the Tax Agenda?

The good news is that the House put together an Obamacare-repeal bill that reduced the fiscal burden of government. The bad news is that the legislation didn’t address the regulations and interventions that produce rising costs and sectoral inefficiency because of the third-party payer problem. Whether the bill was a net plus is now moot […]

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The World’s Most Inefficient Healthcare System, Part II: Created by Government, Financed by Government

I’m flabbergasted when people assert that America’s costly and inefficient healthcare system is proof that free markets don’t work. In hopes of helping them understand what’s really going on, I try to explain to them that an unfettered market involves consumers and producers directly interacting with their own money in an open and competitive environment. […]

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Everything You Need to Know about the Non-Existent Wage Gap between Men and Women

An essential part of a free market economy is the price system. The competitive pricing of goods and services transmits information to producers and consumers and creates incentives for the efficient allocation of resources. Just as the circulatory system or nervous system enables our bodies to function. And when you weaken or cripple markets with […]

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Two Cheers for the Fiscal Changes in the GOP’s Obamacare Repeal-and-Replace Legislation

As I wrote yesterday (and have pontificated about on many occasions), the main problem with America’s healthcare system is that various government interventions (Medicare, Medicaid, Obamacare, tax code’s healthcare exclusion, etc) have created a system where people – for all intents and purposes – buy healthcare with other people’s money. And as Milton Friedman wisely […]

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The World’s Most Inefficient Healthcare System, Part I: Created by Government, Financed by Government

I shared last year a matrix to illustrate Milton Friedman’s great insight about the superior results achieved by markets compared to government. Incentives explain why markets work best. When you spend your own money on yourself (box 1), you try to maximize quality while minimizing cost. And that drives the businesses that are competing for […]

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Obamacare and the Second Theorem of Government

A couple of years ago, filled with disgust at the sleazy corruption of the federal Leviathan, I put forth a simple explanation for what happens in Washington, DC. I call it the “First Theorem of Government,” and I think it accurately reflects the real purpose and operation of government. Except I probably should have added […]

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Another Grim Reminder that Obamacare Has Made Healthcare More Expensive

Way back in 2009, some folks on the left shared a chart showing that national expenditures on healthcare compared to life expectancy. This comparison was not favorable to the United States, which easily spent the most money but didn’t have concomitantly impressive life expectancy. At the very least, people looking at the chart were supposed […]

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Hillary Is Wrong: Subsidies for Higher Education Are the Problem, not the Solution

“So many bad ideas, so little time.” That’s my attitude about Hillary Clinton. She proposes misguided policies at such a rapid rate that I feel like I’m having to spend too much of each day trying to correct all the economic mistakes that emanate from her and her campaign. For the fifth time over the […]

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Hillary’s Statist Agenda

I’ve been accused of making supposedly inconsistent arguments against Hillary Clinton. Make up your mind, these critics say. Is she corrupt or is she a doctrinaire leftist? I always respond with the simple observation that she’s both. Not that this should come as a surprise. Proponents of bigger government have long track records of expanding […]

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