Big Spenders: Increases in health care costs rival the rising of the sun for inevitably. Should we blame greedy doctors and drugmakers? No, blame should be placed on the system the government has promoted.
The tax code encourages employers to buy health care insurance plans with pretax dollars. Because these plans are exempt from federal income and payroll taxes, employers salaries. Nearly 60% of American adults are covered by an employer-based plan.
For most, these plans work well. But the arrangement that so many have become accustomed to has driven health care spending ever higher. The cost of medicine increased 98% between 1992 and 2008, a period when the consumer price index rose 53%. Health care spending now makes up 17% of the economy, a far bigger slice than it did before the 1965 creation of Medicare and Medicaid, when it never went beyond 6%.
Why has this happened? Devon Herrick from the National Center for Policy Analysis has the simple answer: We have become big spenders on health care because our motivation to be thrifty has been legislated away.
"A primary reason why health care costs are soaring is that most of the time when people enter the medical marketplace, they are spending someone else's money."
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