Inflation

Found here: Brad Delong

Education and Medicare lead the pack. Two similar markets with lots of private enterprises serving a market where a large portion of the buyers have the service paid for by a third party.

The government pays a huge portion of both while the users pay very little directly out of pocket. On the medical side, insurance pays most of the remaining portion though there is a portion that is not paid by the user but passed on to other users in the form of increased costs (the 9$ aspirin or "socialism through business"). In education, the remaining portion is paid by parents, companies, or the student's future earnings (loans) that disguise the real out-of-pocket cost of the service.

The buyer in both cases doesn't really shop around for the best price for the service. For medical service, we generally just go to the same doctor like and have we've always used and most just use the local hospital. When choosing a college, though price may play some role, many make the decision based on the field of study, college rating or status, and location.

Both hospitals and colleges increasingly market themselves as what i would call "stars". They need bodies to to create revenue but to draw customers to their doors, they don't offer better prices for their regular services, they try to draw customers in with extra services, a new athletic building, a new cancer center, great workout rooms, new technology, etc. Some of this is needed but it adds to the cost of the basics.

These are not normal markets and capitalists are not stupid. When they see a market that can be exploited for a profit, they jump in and work the system to their advantage. In both education and health care there is a huge government tit feeding the system, along with really, a rather dumb customer base that needs, or thinks it needs the service and isn't responsible for the costs. Both markets are ripe to be mined for excessive profits and I think the graph above shows they have been.

Please note that I do not agree with the free-market types who think that just taking the government tit away is the answer. I think this would lead to a future filled with uneducated, sick people. Instead, I see this as an example of how the intersection of government and business just doesn't work well for our society and though the government tit is somewhat responsible, I think the greed of big business is more at fault. The health care and education establishments have been allowed to exploit the system for the last 30 years. It's time for it to stop. We need a government that protects the people from the profit chasers in these markets through smart regulation, rather than being a the pig that feeds the market like they do here.

also,.. what the hell happened in 1982-84 to cause this to take off?