Rising Health Care Costs are No Mystery
Over the last 50 years, real per capital health care spending has increased substantially. Certainly there are multiple reasons for this, but the most obvious one is seldom ever mentioned -- that the US has seen huge increases in personal wealth over this period, and unsurprisingly people choose to spend a lot of this extra wealth on their own health and life expectancy. In an age where consumerism is often derided as shallow and trivial, what could be more sensible than spending money on more and better life?
Many have pointed to the increased technological intensity of health care to explain rising costs. I suppose this could be true, though in almost every other industry in modern times, increased technological intensity has reduced rather than increased costs.
One issue that does not get enough attention is the prosaic act of shopping. I spend my own money, and I care about price. I spend someone else's money, I don't give a rip. Josh Cothran did a visualization of who is spending health care money. Just look at the 1960 and 2012 charts, and pay particular attention to the orange "out-of-pocket" number. Another way to rewrite these charts is to say consumers care about prices for spending in the orange band only.
Update: Health care cost inflation. Note cosmetic surgery, a field with significant increases in technological intensity over the last few decades, but for which almost all costs are out-of-pocket
