People don’t value a dollar spent on them by government or by employers as much as they value a dollar of earned wages. He makes these observations:
- The income growth within the middle class has derived primarily from increasing net transfers (Social Security, Medicare, Medicaid, etc.), not market income.
- For the 40 percent of households with the lowest incomes, growth in net transfers dominated growth in market incomes even more.
- Over recent decades, more than 25 percent and often 30 percent of the per capita growth in real income has been spent on health care.
- Much of the gain in total compensation for low-to-average-income employees in firms providing health insurance has come from the increased value of the health insurance provided.
My explanation:
Since out-of-pocket health care spending has been averaging 10% of total spending in recent years, every time people spend a dollar on health care only 10 cents comes out of their own pockets. So, their incentive is to obtain health care until it is worth only 10 cents on the dollar.
No wonder they value health care less than what it really costs.