I enjoy reading Alan Reynolds. He has a rare ability to spin facts and figure into compelling stories. I really liked his latest guest column in Forbes magazine on health care, Hey, Big Spender. He contends that government spending on health care is responsible for the runaway costs.
The second paragraph below made my eyes pop.
You can see the bloating influence of government by looking at medical goods and services that are almost never financed by “free” government money: dental care, over-the-counter drugs, hearing aids and eyeglasses. In such cases nobody frets about inadequate competition, poor service or “runaway inflation.”
Hospital fees are another matter, having risen nearly twice as fast as overall medical care. That is no surprise: Government agencies pay nearly 60% of hospital bills, while private insurance (with more incentive to be careful) pays 36% and consumers pay 3% out of pocket.
He also shows that the health care spending has grown as a percent of GDP when government health care spending has grown.
I do disagree with one point he made. He says that the CPI tends to grow faster in all labor intensive service industries. I disagree. I think CPI grows faster in all third party paid industries.