Medical Cost Containment: A Microeconomic Approach

Abstract

The high and rising cost of US medical care is partially attributable to legally enforced rigidities in the health care system. By relaxing restrictions, the government can unlock competitive forces that drive prices down and empower individuals to avoid unnecessary, expensive medical services. A more open health care market would give providers incentives to innovate in ways that not only improve the quality of care but also reduce the cost of offering it. In this report, I suggest that significant cost savings can be achieved by encouraging medical tourism, empowering "mid-level" providers, using administrative law procedures as an alternative to malpractice litigation, reducing the scope of drug patents, and switching prescription medicines to over-the-counter dispensing.