Saturday, January 20, 2007

Merit Goods Inflation Part II

Part II

So how do we get out of this mess? Simple. Government shouldn’t augment demand, it should augment supply. One of the best performing companies in America in the last 20 years has been Federal Express. What do they do? Exactly what the US Postal Service does. They must do it pretty well, because the Post Office isn’t half bad, and yet they stay in business. That’s my model for how health care should work. Federal and state government should collaborate (federal dollars, state implementation and accountability) to provide free or very inexpensive health care to all comers. The free market, the remaining private system, would have to compete and provide value (low cost as well as high quality) in order to survive. Everybody would have access to good quality care. Those who felt superior to the government service would be free to buy the good stuff privately, and they would probably get a decent deal on it.

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