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Manhattan Institute

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HEALTH CARE 2.0, Part 1: How to Think About Market Forces in Health Care

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HEALTH CARE 2.0, Part 1: How to Think About Market Forces in Health Care

January 20, 2016
Health PolicyOther
EconomicsOther

Executive Summary

The Manhattan Institute’s HEALTH CARE 2.0: USHERING IN MEDICINE’S DIGITAL REVOLUTION series delves into the details of how government policy stifles innovation in the delivery of health care. This paper, Part 1, surveys the key economic principles that drive innovative, dynamic sectors of the economy—and explains why American health care does not live up to those principles.

Key Findings

  • Health care-market distortions have considerably worsened since Kenneth Arrow famously described them in 1963; but in other industries less dominated by misguided government intervention, similar distortions have gradually eroded, thanks to technology, especially the rise of the Internet.
  • The tech world is full of stories of individuals who dropped out of college to design software and hardware that changed the world; but such innovation is far less common in health care—for reasons largely determined by public policy.
  • Each current barrier to a more innovative, competitive, affordable health care system was created for a reason; but the cumulative weight of these policies has been to make U.S. health care less innovative, less patient-centered, and less affordable.

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