America's health care problem: an economic perspective

Soaring health care expenditures and the large number of uninsured Americans-now estimated at 35 million-have received much public attention in recent years. The widespread concerns have led to demands for substantial reform of the U.S. health care system. ; Beverly Fox, Lori Taylor, and Mine Yucel identify several distortions in the current health care system that may be contributing to overconsumption of health care by some and underconsumption of health care by others, and thus may be leading to excessively high expenditures and the problems of the uninsured. These distortions include tax subsidies for employer-provided health insurance, regulations and industry practices that restrict the supply of health care professionals, and the noncompetitive nature of the health insurance industry. Effective health care reform must address these distortions rather than nondistortionary elements of the system, such as producer and consumer uncertainty and the changing demographic composition of the U.S. population.