Have you heard about America’s life insurance crisis and the threat it poses to our nation’s economy? I’m betting that you haven’t. If so it isn’t because you are not informed. It’s because there isn’t one. Why? The reason is that there is a real marketplace for life insurance. There is a great deal of competition. There is transparency in the real cost of the product. There are no price controls and the rates reflect the marginal cost of the product. The consumer bears the entire cost of the coverage. The result has been declining real prices and high levels of "productivity." There is also no "crisis" in auto insurance except in states where the regulators have decided that repeat drunk drivers and chronic fender benders must be classified as "safe" in determining rates.

You have heard about the health care "crisis." Why does it exist? The reason is that market for health care and insurance is not a real marketplace. There is effectively little competition. This ranges from 80 percent of employees having one choice in their health plan to highly concentrated medical providers in many geographic locations. There is very little transparency, ranging from very few consumers knowing the true cost of medical services (because of third-party payment) to the employer not allowing workers' cost-conscious choices in the selection of their medical plan. The consumer bears little of the total cost of medical care, leading them to act in an uneconomic manner.

In medical care there is an enormous government price control system for payments to providers. Many private sector carriers copy this system so a huge portion of health care suffers from the deadweight loss that price controls impose. The result is a health system that is woefully inefficient with high levels of cost inflation. It has produced miracle health outcomes but at an unacceptably high fraction of GDP. Amazingly, many argue that the solution to these problems is more government regulation and control. The real solution is to create a real marketplace in health care.

(For more see parts two, , four, and five)