On average, consumers� out-of pocket healthcare costs increased 6.7 percent each year, while national healthcare expenditures increased by an average 9.8 percent each year.

By contrast, increases in expenditures by private insurers, Medicaid, and Medicare accounted for the majority of this excess cost growth�since 1965, private insurers� spending has increased by an average 10.8 percent annually, Medicaid spending has increased by an average 15.4 percent, and Medicare spending has increased by an average of 15.6 percent each year. Also, as you can see, the rate of growth in both Medicare and Medicaid spending far outpaces the rate of growth in out-of-pocket and private insurance costs.

And it�s about to get much worse. On Christmas Eve, the Senate passed the Patient Protection and Affordable Care Act, which further expands Medicaid and Medicare�s roles in the U.S. healthcare system.

Veronique de Rugy. I can't remember or find who said this first -- it does not originate with me -- but the difference between conservative and liberal solutions to health care are that conservatives think holding down costs requires us to make individuals responsible for more of the spending. (That could be vouchers, as Arnold Kling points out, if you worry about distributional effects.) Liberal solutions require a shifting of costs onto a broad tax base and use monopsony to control costs. But doesn't the graph say we've already tried this?

Labels: economics, health care