The U.S. has the world’s most expensive health care, $8,000 per person per year, eating up 16 percent of our GDP. There are many ways of paying these costs, of course, ranging from private insurance such as Blue Cross to public insurance such as Medicare. Many people pay out of their pockets, and local and state taxpayers pick up the rest.
The problem is that health care costs have increased at an annual rate double, or more than double, the rate of inflation for the last two decades. Right now, our attempts at reform are doomed by a law of accounting physics: Insurance can’t cost less than the health care it insures. That means that subsidizing insurance likely makes the problem worse.
Consider: I have car insurance. But my insurance doesn’t pay for oil changes.