Arnold Kling writes:
The biggest incentive problem in health care is the insulation from costs under comprehensive health insurance.
Yet most politicians’ idea of health care reform involves expanding insulation. I’ve got a theory to explain why.
“Insulation” is another term for spending Other People’s Money. Politicians are predisposed not to see spending Other People’s Money as a problem, because spending Other People’s Money is what politicians do for a living. If politicians thought there were something wrong with it, they would be in a different line of work.
If, by some epiphany, a politician were to realize that spending Other People’s Money is wrecking our health care sector, he would be loath to point it out. Doing so would only encourage voters to question whether spending Other People’s Money causes problems everywhere else too.