Byron Schlomach

Health insurance increases health care costs

Posted on September 10, 2008 | Author: Byron Schlomach
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A push for universal health insurance is on the agenda at next week's Southwest Conference on Healthcare Reform at ASU. Since health care policy in the U.S. has been moving that direction for years, maybe we should stop to ask "the Dr. Phil question": How's that workin' for ya?

In 1960, 5 percent of the U.S. economy was devoted to health care; today, that figure is 16 percent. In 1960, 24 percent of health care costs were paid by government and 21 percent were paid by insurance; today, those figures are 46 percent and 34 percent respectively. In 1960, 47 percent of all health care costs were paid directly by consumers. Today, consumers pay only 12 percent.

If you've covered the bar tab for a party, you know people spend most responsibly when they pay for themselves. When people don't pay their own bill, money is no object. This is exactly what has happened in health care. This graph makes the point:

As less of the nation's health bill is paid by patients, health prices have risen geometrically compared to general prices. If medical prices had only risen with general prices since 1960, just over 7 percent of our economy would be devoted to health care today.

As this country debates how best to ensure access to affordable health care, data makes one thing clear; we need more personal responsibility for health care costs, not less.

Byron Schlomach, Ph.D, is director of economic policy at the Goldwater Institute.

Learn more:

Goldwater Institute: Health Care Choice: Giving Arizonans More Health Insurance Options

Arizona Republic: Mayo Clinic leads health-care talks

Centers for Medicare and Medicaid Services: National Health Expenditure Statistics

Cato Institute: Lessons from the Fall of RomneyCare

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