The chart above, created by Reason columnist and Mercatus Center economist Veronique de Rugy, helps explain one reason why health care costs have gone up so much over the past decades: People are paying less out-of-pocket for most medical expenses. Hence, an illusion that care is cheaper than it seems, which leads to more purchases of same. Writing in The American, de Rugy explains:
Much of the rationale behind the current reform of the healthcare system is about controlling inflation in healthcare costs. However, based on the trend presented above, a better alternative to the semi-nationalization that the president has in mind would be to increase individual responsibility for medical decisions and costs. When people aren't exposed to the true cost of their care—even if they pay for it in foregone wages and higher taxes—they consume more.