Medical prices have been rising at rates greater than inflation and medical expenditures have been rising faster than wages. Health economists blame these problems over-use of third-party payments and government interference in the medical market. An article by D. Eric Schansberg in Cato Journal catalogs the results:
Revealing graph.
We buy more if somebody else pays. Isn’t that Eco 101?
I always try to convey this information when I present to groups. As third-party payment became more common, national health expenditures began to increase at a steeper rate. It should be self-evident to an economist that the two phenomenon are related.
We are spending each others money blindly into bankruptcy.