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Health Expenditure: Ignoring the Obvious

There is an interesting article in the New York Times on the pattern of health expenditure and longevity in the U.S. The author's thesis is that both were about the same as in other developed countries until 1980 and that since then  expenditure has grown much faster and longevity more slowly than in other countries. The author runs through a considerable number of possible explanations while ignoring what seems to me the most obvious one.
Medicare and Medicaid were passed in 1965, went into effect in 1966, with expenditure initially small but gradually increasing. Currently, their sum is over a third of all medical expenditure. I am not certain that that is the main cause of the increase in U.S. health care costs, but it fits the timing pretty well.
A health economist writing for the New York Times does not even consider it as one out of his many possible causes.
Source: 
David D. Friedman

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