Public Choice and Private Insurance : The Case of Small Group Market Reforms

This article is one of nine appearing in a forthcoming symposium focused on Richard Epstein's book "Mortal Peril." This article begins by questioning the legitimacy of the conclusions Epstein reaches about the proper role of government with respect to health care financing, observing that Epstein's utilitarian version of libertarian principles could lead to any number of alternative public policy positions than the ones that he advocates opposing virtually all forms of government intervention. The article then shifts focus to a particular set of government interventions, those intended to improve the functioning of the market for small employer health insurance. Accepting Epstein's challenge to establish the case for market regulation with empirical evidence, the article presents findings from an in-depth qualitative study of the impact of these reforms on the health insurance markets in a dozen states. These findings indicate that this set of regulations has been largely effective in keeping these markets functioning in a more socially and economically productive fashion, although these effects are subdued. The article agrees, however, with Epstein's prediction that similar reforms in the market for individual health insurance will be counterproductive or perhaps even destructive