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Thursday, December 10, 2009

Small Biz Health Care Daily: Health Care Economics

What’s missing from the current health care policy debate raging in Congress? Economics.

Quite simply, there’s too much politics and not enough economics in the debate. I suggest that policymakers, interested parties, business owners, taxpayers and consumers pause and consider the actual economics of health care.

The Concise Encyclopedia of Economics offers an ideal essay titled “Health Care” by Michael A. Morrisey. He is a professor of health economics in the School of Public Health and director of the Lister Hill Center for Health Policy at the University of Alabama at Birmingham. Morrisey does an excellent job in hitting the major economic points governing health care, including insurance, spending, taxes, managed care, government health insurance and regulation.

In addition, Patricia Danzon takes a look at the inefficiencies of socialized medicine. She points out the following:

“Both economic theory and a careful review of the evidence that goes beyond simple accounting measures suggest that a government monopoly of financing and provision achieves a less efficient allocation of resources to medical care than would a well-designed private market system. The performance of the current U.S. health care system does not provide a guide to the potential functioning of a well-designed private market system. Cost and waste in the current U.S. system are unnecessarily high because of tax and regulatory policies that impede efficient cost control by private insurers, while at the same time the system fails to provide for universal coverage.”

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

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