Government policy both encourages consumer spending in health and education and protects providers in those industries through licensing requirements that reduce competition from lower-cost or higher-quality providers (charter schools, retail clinics, etc.).
we are living in a world in which entrepreneurs are encouraged to make unlimited amounts of money exploiting reimbursement formulas, but are not allowed to make any extra money making the formulas better and more effective.
He is referring to health care.
If we insist that organizations in health care and education must be government-run or non-profits, we are sentencing those sectors to inferior quality and stagnation. The battle over the New Commanding Heights is crucial for our economy.
Both of the essays linked above are worth reading in their entirety.