Of Price Controls And Tax Codes

clipped from www.forbes.com Since the end of the Second World War, Friedman explained, medical care in the U.S. has displayed three features: technological advances, increases in spending and rising dissatisfaction. Yet the two final features proved unique to health care. While we were paying less and getting more when buying food or computers, in health care the opposite was happening. Why? Because, Friedman saw, most payments for medical care are made not by the patients who receive the care but by third parties, typically employers. Since, in Friedman's phrase, "nobody spends somebody else's money as wisely as he spends his own," this third-payer system by its very nature introduces inefficiencies throughout the health care system. The reason for this wasteful third-party system? The tax code. The policy mistake that produced this illogical mess took place during World War II, when the government imposed wage controls. Unable to compete for workers by paying them more, employers began providing medical care