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Consumer choice and producer innovation informed and motivated
by higher gas prices will do more than arbitrary CAFE standards to
reduce gas consumption in the most appropriate ways. In response to
higher gas prices and information from automobile suppliers unrestricted

by CAFE standards, people can use information on their individual
circumstances to reduce gasoline consumption at far less cost than can
be achieved with orders issued by politicians making decisions in an

almost complete informational vacuum. Yet politicians are far more
likely to increase censorship by restricting increases in gas prices with
price controls, or threats against the petroleum industry, than they are to
eliminate CAFE standards.

Health Care Insurance
Politicians have complained for decades that privately provided
health care in America is excessively costly with too many people

unable to afford health care insurance, and they have promised to do
something about this problem. Yet the political approach to reforming
the private provision of health care has consistently distorted and

suppressed the communication of information needed to inform and
motivate better health care at lower cost and to make health insurance
available at reasonable cost.

First, by not taxing the value of employer-provided health
insurance, but generally requiring direct payments for medical care to be
paid with after-tax income, the federal tax code informs employees that
low-deductible, low-co-pay health insurance is cheaper than it really is.8

And by distorting the information consumers need to make
sensible decisions on health insurance—information on relative costs of
health insurance with different deductibles and co-payments—we also

distort decisions on the use of health care. Second, state governments
have responded to the political influence of various providers of medical
care by requiring that employer-provided health insurance cover a large
number of services that many employees do not want or need (see

Cogan, Hubbard, and Kessler 2005: 41–46). This excess coverage
increases the price of health insurance, telling consumers that it is more
costly than it needs to be, which results in fewer people buying health

insurance.
When people have low deductible-low co-pay health insurance, the
direct prices paid for medical care communicate to consumers that the cost

of that care, once they pay the deductible, is only a fraction of the real cost.
This distorted information results in consumers demanding care well