"The fundamental problem with state and employment-based programs to solve the problem of extending medical care to all risk classes is as follows:
A (the physician,hospital,or other medical service supplier) recommends to B (the patient) what he or she should buy from A and C (the insurance company or government) reimburses A for the services. This is an incentive nightmare and it explains why the price of medical services persistently rises faster than almost all other economic products and services..."
Smith then comments that educational services are analogous and continues "These are examples in which consumer sovereignty is compromised by lack of direct experience and knowledge, and the supplier who harbors an inherent conflict of interest, is considered best capable of deciding what the consumer should buy."
If Smith analysis is on target what can we expect from
The incentive issue is what Milton Freedman talks about when he talked about the various way people can spend money.