Duke Law School professor Clark Havighurst and Barak Richman get at the root of the problem with health insurance in this article in today’s Wall Street Journal.

The trouble is that the true costs are hidden from consumers because health insurance is mostly provided through employers. The fact that costs are hidden leads to a lot of cross subsidization that, the authors argue, mostly benefits the wealthy. They write, “Weak consumer cost-consciousness has left the U.S. with private insurance that functions as a reverse Robin Hood scheme, taking from middle-income Americans to support a health system that benefits many elite interests. A significant fraction of the cost individuals incur for health coverage goes not to pay for care they and their families receive, but to support a variety of industry activities and projects, including medical education and research and the building of costly facilities.”

Health insurance in the U.S. would have evolved much differently if it hadn’t become linked to employment, which was an unforeseen consequence of another governmental folly, namely wage and price controls during World War II. The ultimate solution here is to separate employment and health insurance so that people are spending their own money and shopping for policies that are best for them.