I’ve made a few political posts on An Arrow Through the Air (okay, perhaps more than a few), but tend to avoid them. Plenty of news outlets and commentators do a good job saturating us with news and news analysis.

But this one I must, because I found a magazine article that agrees with me and presented the same analysis of health care costs that I did at least five years ago.

Somehow we got on the mailing list for Imprimis, the magazine published by Hillsdale College. We’ve never given them money, so it was a curiosity when it first showed up in our mail. It’s a good magazine, however. I tend to read the issues in batches, whenever the magazine basket gets to overflowing.

Last week I read the September 2018 issue. The article is titled “A Short History of American Medical Insurance” by John Steele Gordon. I don’t know him, but I like his article. Perhaps I like it, in part, because he agrees with views I already had, yet gave me new information at the same time.

I’ve said for a long time that things paid for with other people’s money tend to rise in price faster than things you pay for with your own money. Or, put another way, what you don’t pay for yourself and directly you won’t fight to keep the cost low.

Health insurance isn’t exactly other people’s money, but, when you go to the doctor’s office and have a $25 co-pay, or when you pic up a med at the pharmacy and have a $4 co-pay, you tend to not pay any attention to the actual price of the thing. $4 for a month of pain pills? Great. $25 to see my PCP to see about my chronic condition? Best bargain in town.

Thus, forgetting that the actual cost of going to the doctor is $188, with you paying $25 and insurance paying $163. Except, you have to pay for the insurance, but that’s taken out of your paycheck and you never see it. And for sure you never see your employer’s contribution. The prescription or office visit looks like a bargain, but it probably isn’t. You see no need to fight to keep the cost down, or find a lower-priced alternative.

Slowly, over the years, those who provide those services learn they can increase their costs to a fairly high level, up to a point where the insurance company starts pushing back.

Now, I realize you shouldn’t purchase medical care based on low-bidder. These are professional services. You want the best you can get. The problem is, removing the payment away from the consumer results in the consumer simply not paying much attention, and prices go up.

Don’t worry; it’s not just you. A hundred million purchasers of medical services in America are doing the same thing. One person trying to buck the system isn’t going to get far. It’s an unfortunate result of believing that the “windfall” of having your bills paid for with other people’s money means you pay more in the end. You paid for a big chunk of your health insurance. And, if your employer didn’t pay for the rest of your health insurance, that money would be part of your salary. With the greater amount of money you could shop around for the best services at the lowest acceptable cost, and would most likely come out ahead. Health insurance would become true risk mitigation, which is the true definition of insurance.

The phenomenon is the same with other things that are paid for with other people’s money. The main one that comes to mind is a college education. When 50% of the cost comes from scholarships (other people’s money), 40% from loans (temporary use of other people’s money) , and a mere 10% from out-of-pocket during the college years, the payments are so far removed that the consumers of college educations don’t try to apply pressure to keep the costs down.

These are things I see the results of, but have no answer on how to reverse a trend and make it better. Too many people are enamored at the thought that other people are paying their bills to ever change back.

I should take time to quote a number of places in Gordon’s article where I feel he is spot on in his analysis. My post is already too long, however. Perhaps I’ll make a second post. If not, I leave it by saying I’m glad to have had corroboration, from a source I admire and consider authoritative, for some long-held beliefs.