Government intervention in health care, as in other areas, is generally justified on the basis of market failure (deviations from the perfectly competitive model) and merit wants. Such intervention has usually taken the form of regulatory programs. Lately, a number of analysts have suggested that such programs are defective and have recommended several policies designed to establish the conditions for a competitive market in health care. Alain Enthoven's Consumer-Choice Health Plan (CCHP), combines many of the elements of market reform and, as such, provides an opportunity to examine the overall approach. This article describes and criticizes the plan's underlying analysis, theory, ability to control rising health care costs, and implementation problems, and questions the political foundation of market reform.

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