In 1960, the private sector funded more than three quarters of the nation’s health care expenditures. Individuals paid nearly one half of total national health care expenditures through out-of-pocket expenditures. Beginning in 1967, the way health care is purchased in the United States began to reverse. This has resulted in a large and growing government “health care wedge” — an economic separation of effort from reward, of consumers (patients) from producers (health care providers) — caused by government policies. Rising government expenditures for health care are the main factor driving the growth of this wedge, which is a primary driver in rising health care costs, i.e., inflation in medical costs. Federal proposals for health care reform currently under consideration would exacerbate these problems, rather than solve them.

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