November 17, 2008 9:58AM # Health Insurance: Why Markets Are a Better Bet Than Government By [Michael F. Cannon](https://www.cato.org/people/michael-f-cannon) --- SHARE Two trends in job-based health benefits demonstrate why markets are a better bet than government for containing health-care costs and preserving choice. Today’s *New York Times* [reports](http://www.nytimes.com/2008/11/15/business/15insure.html): > even if they are fortunate enough to have a job at a company that still offers health benefits, many workers are finding that the buffet of options has been trimmed to a very short menu… > > > this year, at more than 100 large companies and hundreds of smaller ones … high-deductible plans are the employee’s single take-it-or-leave-it option. One of those companies is the automaker Nissan, which is offering only high-deductible plans to its 15,000 United States employees for the coming year. Another is Delta Airlines. Expect to hear the usual nonsense about how employers are cost-shifting to workers ([they aren’t](https://www.cato.org/2008/10/15/not-a-cost-shift-but-a-control-shift/)) and how high-deductible coverage will harm workers’ health ([it won’t](https://www.cato.org/pubs/pas/pa569.pdf)). The real lessons to be taken from this news are: 1. **Markets are better than government at cost-control.** The cost of both public and private health insurance is rising. Despite being [badly hampered by government intervention](https://www.cato.org/pub_display.php?pub_id=9679), the private sector is responding by cutting back on overly generous health coverage, a move that will reduce use and cost growth. How is the government responding? By [expanding](http://www.commonwealthfund.org/healthpolicyweek/healthpolicyweek_show.htm?doc_id=728453&#doc728454) [public](http://www.commonwealthfund.org/healthpolicyweek/healthpolicyweek_show.htm?doc_id=728453&#doc728456) [subsidies](http://www.commonwealthfund.org/healthpolicyweek/healthpolicyweek_show.htm?doc_id=728453&#doc728457), which contribute to cost growth. 2. **Forced pooling reduces choice.** In unregulated markets, the healthy quite happily [subsidize the sick](http://www.nber.org/reporter/summer05/pauly.html). But when government forces the healthy to do so, healthy people bolt from comprehensive health plans, [which then causes those plans to collapse](http://www.nber.org/reporter/summer06/buchmueller.html). One of the ways that government badly hampers private health-insurance markets is by [herding us all into job-based insurance pools](http://www.bepress.com/fhep/11/2/3/), in an attempt to force the healthy to subsidize the sick. And wouldn’t you know, employers are now having to drop comprehensive plans. There must be a lesson in here for [Obauckennewyden](https://www.cato.org/2008/11/13/blocking-obamas-health-plan-is-key-to-the-gops-survival/). ##### Related Tags [General](https://www.cato.org/general), [Health Care](https://www.cato.org/health-care) [![Creative Commons License](/build/cato_2020/images/creative-commons.svg)](http://creativecommons.org/licenses/by-nc-sa/4.0/) This work is licensed under a [Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License](https://creativecommons.org/licenses/by-nc-sa/4.0/).