Regulation shapes all aspects of America's fragmented health care industry, from the flow of dollars to the communication between physicians and patients. It is the engine that translates public policy into action. While the health and lives of patients, as well as almost one-sixth of the national economy depend on its effectiveness, health care regulation in America is bewilderingly complex. Government agencies at the federal, state, and local levels direct portions of the industry, but hundreds of private organizations do so as well. Some of these overseers compete with one another, some...

By relying on private enterprise more than any other developed nation, American health care has all the appearances of the free-market in action. And for more than a hundred years, attempts to reform this system (including President Obama's Affordable Care Act) have been met with opposition from parties warning against the stifling effect of government intervention.

What these warnings about federal intrusion overlook is the fact that the federal government has long been an indispensable player in guiding and supporting the current US health care system. Its role is so pervasive and of...