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

It’s had the same pernicious effect on college education costs as it has in the health sector.

International Liberty

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 instance, imposes an enormous burden on our economy.

Today, though, we’re going to look at how subsidies can result in costly distortions. More specifically, using examples from the health sector and higher-ed sectors, we’re going to see how “third-party payer” is a very expensive form of intervention.

We’ll start with the example from the healthcare sector. Writing for the Institute for Policy Innovation, Merrill Matthews has a must-read article about an unintended consequences of Obamacare.

He starts with a very sensible point about the effect of third-party payer.

Health care actuaries will tell…

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

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