Factors like business regulation, the labor market, monetary stability, property rights and corruption are used to determine the rankings.
Terry Miller, director of the Center of International Trade And Economics at the Heritage Foundation, says the U.S. ranking may continue to fall.
"Certainly looking at the government policies that have been followed over the last year, since our last data cut off, I'm very concerned," Miller told TPM, adding that health care reform was likely to further hurt our economic freedom.
Among the countries now ranked higher than the U.S. are Canada (where health care is universal), Singapore (where spitting is forbidden) and Ireland (whose economy was free to experience a near collapse).
(h/t Political Wire)