Saturday, May 12, 2012

Costs of the employer health care deduction and other links

  • Writing in Forbes, Avik Roy explains how the employer health care deduction drives up health care costs for everyone, in part by increasing the bargaining power of major hospitals and weakening the incentive of insurers to resist that bargaining power. "Fourth-party insurance is worth than third-party insurance," says Roy.
  • John Kay of the Financial Times writes that it is time to reform banking regulation to encourage more innovation and competition. What particularly gets him going are regulatory requirements that force anyone who wants to start a new bank to make it just like other banks. Imagine what it would be like, says Kay, if there were a software regulatory agency that had required Bill Gates to work for several years at IBM and finish his Harvard degree before starting his own software firm.
  • Simon Johnson sees the $2 billion trading loss at JP Morgan as a sign that banks can't be trusted to manage risks wisely. The disaster at the bank that was supposed to be the best risk manager strengthens the case for stronger regulation of proprietary trading.

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