The ideologues of Congress transfixed with fixing health care by injecting market forces into it would be well served by a pensive stroll down Main Street at lunchtime. There they would see food trucks on demand, plentiful samples, appropriate prices and even have the ability to further inform their choices with cellphone apps. Indeed, they would observe an efficient market, one where consumers and producers have a full understanding of the transaction, and a place where people get what they want for how much they want.
But hotdogs aren’t like health care. Insurance is much more complicated — and with thousands of intricate parts to it, producers understand far more than consumers. Insurers have a monopoly of information and with this unequal understanding it is often difficult to determine what a fair price is, what coverage is actually provided, and how much is truly needed. This is a situation ripe for imperfect competition, an economic phenomenon defined by faulty market functioning that results in poor societal distribution.
As of recently, there are no standing proposals for a new agency in charge of take-out food and condiments. Recall that the Affordable Care Act exists because unlike during lunchtime, many people don’t end up with the care they need at a price they can afford. While we should rightfully worship Adam Smith’s “invisible hand” for all that it has given us, it must be realized that this success does not negate the government’s ability to do good in industries that fail to distribute efficiently and equitably. Just check with the rest of the developed world.
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