Temporary Fix, Permanent Cost: Why Health Insurance Is Expensive

Published September 8, 2020

The government is quick to enact policies during a crisis, but policies that sound good in the short term can have bad long-term consequences. Government-mandated wage and price controls during World War II prompted employers to lobby for employer-paid health insurance that was not counted as taxable income. When wage and price controls were lifted, the tax-free status of employer-paid medical care remained in place, driving up medical costs and health care premiums for all.

Discussion Questions:

1. What are other examples of federal policies with good intentions and negative consequences?
2. How can we bring down the cost of health insurance?

Additional Resources:

• Read “How to Cure Health Care,” by Milton Friedman. Available here.
• Read “How to Cure Health Care,” an interview with Milton Friedman. Available here.
• Read “Pricing Health Care: The Folly of Buying Health Care at the Company Store,” by Milton Friedman via the Wall Street Journal. Available here.