Side Effects and Complications: The Economic Consequences of Health-Care Reform.

• Author: Cannon, Michael F.

Side Effects and Complications: The Economic Consequences of Health-Care Reform

Casey B. Mulligan

Chicago: University of Chicago Press, 2015, 352 pp.

It is a cruel fact of history, but for seven decades and counting, the U.S. government has joined the market for health insurance in unholy matrimony with the market for labor.

It's cruel to workers. Separation from a job, for whatever reason, means, at a minimum, disruption of one's health insurance coverage, and often disruption of one's access to care. Rather than encourage coverage that would stay with workers after they retired, for example, the shotgun marriage of these two markets casts millions of workers out of their health plans the moment they reached retirement age--many of them with suddenly uninsurable preexisting conditions.

It's cruel to taxpayers, because its impact on retirees fueled the creation of the incredibly expensive and wasteful Medicare program.

It's cruel to economists, who, if they seek to understand and improve the functioning of one market, must become experts on two.

It's cruel to policymakers, in that it fosters a misleading picture of trends in worker compensation, along with a network of tripwires and unintended consequences that stymie sensible reform.

And, finally, it's doubly cruel to workers, because it allows policymakers to hide the cost of insensible reforms in forgone wages--as Congress quite consciously did under the Affordable Care Act of 2010, not to mention previous and equally dubious "affordable-care acts."

This shotgun marriage could not have survived without some beneficiaries, notably: the health sector, on which it bestows large implicit subsidies; large employers, to whom it grants a competitive advantage over smaller competitors; and policymakers, on whom it bestows greater importance and a reason to legislate.

And legislate they have. Having conferred an enormous tax preference on a lousy insurance product, Congress is continually struggling to fill in cracks in the health sector that Congress itself created or widened. Medicare, the largest purchaser of medical care in the world, exists to fill just one such gap.

Congress also regulates everything from the content to the pricing to the timing of employer-sponsored health insurance. Where not preempted by federal law, states have regulated even further. With the exceptions of Medicare and Medicaid, however, no insensible reform surpasses the Affordable Care Act (ACA), known colloquially as...