Health Plan Op-Ed From the

Health plan op-ed from the WSJ touches on some opportunity costs, in particular the tradeoff between the current system of incentives for health care insurance and the one that Bush was proposing. The tradeoffs came in the form of the amount of coverage by insured numbers, and in terms of the costs associated with health care coverage. Where there are opportunity costs, there is room for a cost-benefit analysis, because the Bush plan shifts the benefits of the health care insurance system around a bit as well.

The plan and article also address the issue of scarcity in the recommendation to create a national health care market that allows for individuals to have better access to new insurance products by increasing the number of competitors and the overall size of the market in which they must make their purchases. The article primarily concerns incentives. The article advocates the proposed incentive system as superior to the existing one for a few reasons.

The main reason is that the current system of providing tax incentives to businesses for health insurance means that businesses are the usual providers of such insurance and that individuals have a poor market for health insurance. Changing the incentives would improve the market for individual health insurance, something the WSJ feels would bring about a better set of outcomes than the current system.

Government involvement in the health care system is high, and this involvement creates a number of incentives that distort the market for health care in the U.S. It may seem disingenuous for the WSJ to criticize one system of incentives as negative because it reflects government intervention while supporting a different set of intervention incentives -- both the existing plan and the Bush plan are systems of incentives designed to bring about certain outcomes. 3. The article does not touch much on supply/demand equilibrium.

There is a supply issue in health care, but because the Bush plan does not address that too much, it is not touched on in the article much. If there are five million more insured as the editorial predicts, this will create a supply/demand mismatch, and the plan probably should have a strategy to increase supply in the health care system in order to accommodate that increase in supply. There are certainly further efficiencies available in the U.S.

health care market, and this is evident in the lack of coverage for money and the rapidly increasing coverage for those who have it. The article does touch on a key source of inefficiency beyond government regulation -- the opacity of the insurance and health care markets. The most efficient markets rely on perfect information -- or something close to it -- for their functioning.

At present, the health care market is so opaque that few customers truly understand what they are paying for or even how much they are paying. The WSJ rightly supports the elements of the Bush plan that will improve public availability of market information, as this will increase efficiency -- in some cases significantly. 4. A marketizing measure would bring market principles into the market, or improve the quality of those principles in the existing market. This reform has only a handful of elements that truly marketize the health care market.

The policies that would result in removing regular check-ups from insurance, for example, are marketizing policies, as are policies that would improve the quality of the market for individual health insurance. The reform in general, however, does not add to the marketization of health care. The key element, shifting around the incentives for health care insurance purchase, merely alter the existing set of.