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Effect of Regulation on Health Care Quality: U-Shaped?

The Cato Institute’s Michael Cannon moderates an interesting policy forum on “Does America’s Health Care Sector Produce More Health?”  A podcast of the forum is available here.

Is a single payer system better than an unregulated health care system? If they U.S. scores worse on health care metrics, does that mean that unregulated health care systems are inherently inferior? Not necessarily. The U.S. is not a truly unregulated health care system. In fact, it could be the case that health care quality as a function of regulation could be related as follows:

The U.S. is somewhat regulated, but less regulated than health care systems in most European countries. Thus, it could be the case that moving the U.S. towards a single payer system or moving towards a completely deregulated system could both improve health care quality in America.


  1. Hmmm…. no points on the graph. Graph exhibits beautifully drawn curve, with no apparent empirical evidence to support it. Is this the health economics version of the Laffer curve?

    Could there be a sweet spot between regulated and unregulated extremes? Sure. Keep in mind, however, that trying to solve the principal-agent problem in health care treatment suggests the spot is a lot closer to the regulated extreme.

  2. Tsai: The graph above doesnt seem to be the result of a regression, simply a hypothetical possibility…

    The biggest problem with running that regression would be quantifying the x axis (not to mention the well documented difficulty with quantifying the y axis)

  3. You are exactly correct. I did not have any data to prove this point; doing so empirically would be extremely difficult. However, it was an interesting philosophical point to consider.

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