Economists have been arguing for some time that the reason costs in the medical sector of the economy are rising so rapidly is that the medical market is inefficient. Some argue that it is inherently inefficient and advocate a regulatory approach to cost control; others maintain that the inefficiencies are attributable to artificial market imperfections (such as fee-for-service and retrospective payment, tax incentives to overinsure, and entry barriers to the manpower market) and advocate restructuring the market to make it more competitive.1 Probably both groups are right, up to a point. However, neither group has had much success in getting . . .