The Corner

‘The High Cost of No Price’

Every woman knows it: If suddenly someone else is willing to pay for a share of our shoe consumption, our demand for shoes will go up. In this piece in The American, I show that what is true for shoes is also true for health-care consumption.

In 2008, consumers were only directly responsible for 11.9 percent of total national healthcare expenditures, down from 43 percent in 1965, according to new data from the U.S. Department of Health and Human Services. This means that someone other than consumers pays roughly 88 percent of all healthcare costs, giving consumers little incentive to mind costs and much incentive to over-consume.”

Check out this very telling chart:

So instead of the semi-nationalization of health care that the president has in mind, Congress should increase individual responsibility for medical decisions and costs. Once people are exposed to the true cost of their care — even if now they pay for it in foregone wages and higher taxes — they will consume less.

The whole thing is here.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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