America Can’t Shake the Cost Disease
Rising wages have little to do with the huge increases in prices for health care and college.
20th century scholarship, 18th century efficiency.
Photographer: Thomas Lohnes/Getty Images EuropeA disturbing graph is making the rounds. Labeled the “chart of the century” by some commentators, it shows the changes in prices for various goods and services in the U.S. since 1997. Although food, clothing, cars and electronics have all become cheaper, health care, child care and education have soared in price relative to workers’ wages. Here’s a simpler version of the graph that shows how prices for these big-ticket services has outpaced income gains:
Why is this happening? The rise in health-care prices is often blamed on hospitals’ monopoly power and on the perverse incentives of the employer-based health-insurance system. The rise in education costs, meanwhile, is often blamed on administrative-cost bloat at universities.