I blame WWII, and the idiots we had in Congress at the time. Before WWII, health care was super cheap. It was so inexpensive that nobody budgeted for it, or considered how they would ever pay for it. Health insurance technically existed, but it was rarely used; most people would never have high medical bills, so most people saw no advantage in paying a monthly fee for the insurance instead of just paying for the health care as they needed it.
During WWII, Congress wanted to be seen to help the war effort, so they started passing bills. Some of those were ok, some were terrible. The worst were the price and wage controls. Price controls create shortages, and wage controls create shortages of workers. Since the supply of employees went down drastically (with so many people going into the military), naturally wages had to rise. But once wage controls were in place, employers could not offer more money. The best that they could do was to offer perks instead. Waiters started asking for tips. White–collar employers started offering free health insurance and other perks. Others offered free housing, and even whole company towns. Pensions are another good example. By the time the war ended, these and other perks were rapidly becoming ubiquitous.
Free housing and company towns were too easily abused, so in the 50s those were gradually done away with. You can read about the problems with tipping elsewhere.
Ever since the end of WWII, the cost of healthcare has risen steadily. (So did the quality of the care, of course.) People no longer pay for health care as they need it. They no longer shop around for the best prices, even for predictable expenses such as childbirth. Most hospitals won’t even tell you what their prices are, even though they are now technically required to maintain a webpage with that information. (Most primary care physicians are much more reasonable about such things, but even they might not know ahead of time what everything will cost, since it might depend on what insurance you have.)
It’s pretty easy to see why prices are rising. People pay thousands of dollars per year for insurance, whether they need any health care or not. Nobody knows exactly what anything will actually cost until afterwards, when they are arguing with their insurance company about it.
In fact, prices are so opaque that hundreds or thousands of people every year make simple mistakes that cost them tens of thousands of dollars. There are as many sob stories as you care to listen to from people who went to a hospital with an injury that wasn’t immediately life threatening and were billed some outrageous amount. They could have gone to their normal doctor to have their broken bone set for a couple hundred dollars, but they instead have to pay thousands for the ambulance ride, thousands for the hospital bed, thousands for consultations with doctors whose names they don’t remember, etc.
Now it is true that in situations like this it is difficult to go back in time and replay history with different choices, so I admit that this is not all as obvious to people as I make it sound. There is plenty of scope for disagreement about causes and effects.
However, there is another source of evidence. Instead of going back in time and making different choices, we could do an A–B test. Have one group of people go with ubiquitous health insurance and another group avoid it, then compare the outcomes. You might think that this would be hard to arrange, but it actually happened! The Amish arranged their own lives to avoid most of the complications of modern life and high technology, and apparently that includes insurance as well. As I understand it, their health care is still very inexpensive; they haven’t had the same continual rise in prices that the rest of us have had.
How effective was medicine before WWII? How complex was it? How many instruments for extensive tests were there? Labs that would run analysis to find out what is wrong with you so that doctors could figure out how to best cure you?
Sure, the current system is preposterous and prices are way higher that necessary, but we can't just compare with the past unless you also want a service like the one you'd got in the past, which is probably still quite affordable.
You don't need to compare with the past. Just compare with other countries, where you can pay 300 a month and have all your family fully covered privately. No copay. No public health. Although you can skip the payment and get public health. Or even have both and decide when to go private and when public. All in much less powerful economies.
I think OP was pointing to a potential starting point of the raise in prices and decoupling it from the actual services rendered. Something I think is very likely given that now there are a lot of examples where things are comparable quality with much lower prices. It might not be exactly WWII, but it certainly was caused by some factors not tied directly to the quality of the services.
Right, I never tried to say that there was only one cause for prices going up. However, note that technology has vastly decreased costs across all industries too. Faster communications, faster billing and payments, digital images instead of film that has to be developed, etc, etc. It’s not immediately obvious that the rising quality of healthcare would necessarily make it more expensive, given the vast cost reductions happening at the same time.
Technology has vastly decreased the cost of things that existed.
Technology also vastly increased the cost of things that didn't exist.
Prior to the invention of video games, nobody spent a dime on video games. People today spend a lot of money in air travel while before WWII very few people spent money on air travel. Etc
During WWII, Congress wanted to be seen to help the war effort, so they started passing bills. Some of those were ok, some were terrible. The worst were the price and wage controls. Price controls create shortages, and wage controls create shortages of workers. Since the supply of employees went down drastically (with so many people going into the military), naturally wages had to rise. But once wage controls were in place, employers could not offer more money. The best that they could do was to offer perks instead. Waiters started asking for tips. White–collar employers started offering free health insurance and other perks. Others offered free housing, and even whole company towns. Pensions are another good example. By the time the war ended, these and other perks were rapidly becoming ubiquitous.
Free housing and company towns were too easily abused, so in the 50s those were gradually done away with. You can read about the problems with tipping elsewhere.
Ever since the end of WWII, the cost of healthcare has risen steadily. (So did the quality of the care, of course.) People no longer pay for health care as they need it. They no longer shop around for the best prices, even for predictable expenses such as childbirth. Most hospitals won’t even tell you what their prices are, even though they are now technically required to maintain a webpage with that information. (Most primary care physicians are much more reasonable about such things, but even they might not know ahead of time what everything will cost, since it might depend on what insurance you have.)
It’s pretty easy to see why prices are rising. People pay thousands of dollars per year for insurance, whether they need any health care or not. Nobody knows exactly what anything will actually cost until afterwards, when they are arguing with their insurance company about it.
In fact, prices are so opaque that hundreds or thousands of people every year make simple mistakes that cost them tens of thousands of dollars. There are as many sob stories as you care to listen to from people who went to a hospital with an injury that wasn’t immediately life threatening and were billed some outrageous amount. They could have gone to their normal doctor to have their broken bone set for a couple hundred dollars, but they instead have to pay thousands for the ambulance ride, thousands for the hospital bed, thousands for consultations with doctors whose names they don’t remember, etc.
Now it is true that in situations like this it is difficult to go back in time and replay history with different choices, so I admit that this is not all as obvious to people as I make it sound. There is plenty of scope for disagreement about causes and effects.
However, there is another source of evidence. Instead of going back in time and making different choices, we could do an A–B test. Have one group of people go with ubiquitous health insurance and another group avoid it, then compare the outcomes. You might think that this would be hard to arrange, but it actually happened! The Amish arranged their own lives to avoid most of the complications of modern life and high technology, and apparently that includes insurance as well. As I understand it, their health care is still very inexpensive; they haven’t had the same continual rise in prices that the rest of us have had.