The key to reforming America’s health care system is increasing reliance on the free markets, rather than extending government control, Dean R. Glenn Hubbard wrote in an editorial published in today’s Wall Street Journal. Changing tax policies and health insurance regulations would reduce costs, give patients more control over their care and even lead to higher wages, Dean Hubbard wrote. The editorial was coauthored by John F. Cogan, a senior fellow at the Hoover Institution, and Daniel P. Kessler, a professor at Stanford’s Graduate School of Business and a senior fellow at the Hoover Institution. The authors propose making out-of-pocket health expenses fully tax deductible, which would cut wasteful spending and lower costs. “If out-of-pocket health-care expenses are made tax deductible, workers would demand that employers provide health plans with lower health-insurance premiums and higher co-payments,” the economists wrote. “Under the proposed policy, they will reap the benefit of reduced premiums by receiving larger wage increases.” The authors also recommend allowing insurance companies to sell policies nationwide and creating reasonable caps on damages awarded for pain and suffering in medical malpractice suits. The editorial can be viewed on the Wall Street Journal Online (subscription required). Hubbard, Cogan and Kessler recently published Healthy, Wealthy, and Wise: Five Steps to a Better Health Care System (AEI Press).