News Release

September 14, 2005

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Healthy Competition: What's Holding Back Health Care and How to Free It

Healthy Competition, a new book published today by the Cato Institute, provides a blueprint for re-invigorating America's troubled health care sector. Former Secretary of State George Shultz calls Healthy Competition "essential reading."

Michael F. Cannon, Cato's director of health policy studies, and Michael D. Tanner, Cato's director of health and welfare studies, explain how market competition makes products of ever-increasing quality available to an ever-increasing number of consumers.

They demonstrate how market competition can do the same for medical care and health insurance. The authors even show how encouraging competition can lower the cost of public health programs and improve government regulation of health care.

Cannon and Tanner recommend spurring greater competition in the private sector by expanding health savings accounts (HSAs). The authors propose creating "large HSAs" that would give workers control over all their health benefits, rather than just a portion as HSAs now do.

The authors offer advice to Congress, the states and the new Medicaid Advisory Commission (a panel created by Congress) on reforming that program. They argue that Congress should reform Medicaid as it reformed the old AFDC cash-assistance program: cap federal funding and give states broad flexibility to reduce dependence. At the same time, states should encourage private competition by returning their Medicaid programs to their original mission of providing medical care to the truly needy.

The book explores Medicare's enormous unfunded liabilities - which are six times those of Social Security - and argues allowing today's workers to save a portion of their Medicare taxes in a personal account. The authors argue this would encourage competition and "minimize the cost of meeting existing Medicare obligations."

In a foreword to the book, former Secretary of State George Shultz writes, "Cannon and Tanner offer proposals that would further tap the power of markets to make health care more valuable and more affordable. That makes Healthy Competition essential reading."

About the Authors

Michael F. Cannon is the director of health policy studies at the Cato Institute. Previously, he served as a domestic policy analyst at the U.S. Senate Republican Policy Committee under Senator Larry E. Craig (R-ID).

Michael D. Tanner is the director of health and welfare studies at the Cato Institute, where he directs research on new, market-based approaches to health, welfare and other government "entitlements."

Healthy Competition: What's Holding Back Health Care and How to Free It
by Michael F. Cannon and Michael D. Tanner
Retail Price: $9.95 paper; 188 pages
ISBN: 1-930865-81-3
Publication date: September 14, 2005