How Government Policy Inflates Health Care Costs: The Curse of Cross-Subsidies
Published September 29, 2020
Cross-subsidies exist when the government allows companies to overcharge one set of consumers in order to subsidize others. Cross-subsidies require the government to enforce monopolies to stifle new competition that would otherwise offer lower prices. Innovation suffers and prices rise as a result. A more effective way to lower health care prices is to tax and spend on budget using market prices.
- How would you explain cross-subsidies to your friends?
- What are examples of cross-subsidies in other industries?