And much of that increase in drug spending is for non-life threatening conditions. Consider Viagra, for example. Why any health plan covers it is way beyond me.
The key paragraph for understanding how we got where we are today is:
Moreover, a core problem with America's health-care costs afflicts drug prices like just about every other aspect of health care — third-party payments. Back during World War II, the U.S. government imposed wage controls. In an effort to compete for workers, employers (who couldn't effectively compete by offering higher wages) began offering health-care benefits. Later, the IRS approved employer-provided health care and health insurance as deductible business expenses. Individuals, who previously took care of these things themselves, could not get a similar deduction when they purchased health insurance out of pocket. This bias in the tax code helped mightily to push America toward a third-party (employer-provided insurance) payment system. As a result, Americans spend more freely for health care without shopping around and asking tough questions.
Senior MDs involved in health policy know the history above but seldom discuss it as they restrict themselves to the issues of universal healthcare. They refer to the relationship between the employer and insurer as the "unholy alliance".
Insurers welcome the above arrangement as it allows them to negotiate with one entity (the employer or union) for a group of relatively healthy individuals (working Americans), healthier with respect to the general population.
Americans need to purchase their health insurance in the same manner that they purchase auto or life insurance. In fact, employers and Unions should issue medical vouchers to employees and members for purchasing health insurance and be barred from negotiating on behalf of the individual employee and member. Why?
First, in this era of loose morals and high level corruption, the cozy relationship between insurer and employee is conducive to schemes of illegal kickbacks as well as selling the working class a shabby healthcare plan.
Second, the mere association and verification of an association of an employee with an employer such as say Microsoft, together with such factors such as age, marital status and medical exams will enable insurers to offer individual employees similar coverage at same premium levels.
Thirdly, as Friedman captions so eloquently as cited in the post above, there is no better educational tool for developing good spending habits that of having individuals spend their own allowances. Individuals shopping for their own insurance will allow market access by thousands of additional insurers. The competitive market forces, after a period of shakeout, will put pressure to lower premiums or increase coverage.