The Regulatory Ratchet: Why Regulation Begets Regulation -- Fatal Flaw In The Market For Health Care
35 Pages Posted: 29 Nov 2018 Last revised: 14 Jan 2019
Date Written: September 23, 2018
Regulation routinely functions like a ratchet, a tool designed to apply force in one and only one direction. Whatever else regulation does, it almost always begets more regulation. Part I of this article explains why and how the regulatory ratchet works. It focuses on the incentives to regulate and the suppression of information about its impact. Part II illustrates the explanatory power of the regulatory ratchet model by tracing five major turns in the market for health care. The health care market provides graphic illustrations of the regulatory ratchet at work, graphic because the consequences caused or exacerbated by each turning include physical suffering and, on occasion, death. The final part of this article, Part III (1) argues that the likelihood that regulation will beget more regulation ought to figure in any cost benefit analysis of a proposed regulation and (2) suggests how the regulatory ratchet model might be refined to facilitate its use.
Keywords: Regulation, Health Care, Public Choice, Law and Economics
JEL Classification: D7, I1, K,
Suggested Citation: Suggested Citation