Medical care costs in an extended inflation. A discussion of the development of the voluntary insurance mechanism, the medical care price index, inter-relationship of price indexes and quality changes, and the real cost of medical care.

Abstract

Those who criticize the voluntary insurance mechanism in payment for health care because of rising costs of medical care prejudice the statement of an issue of considerable significance. There is much to be said for the hypothesis that the development of the voluntary insurance mechanism was brought about because of rising medical costs, not that the rise in medical costs was caused by the system developed. Despite such allegations by some critics 1 there is no evidence to support the position that the rise in medical care costs has been caused by the increase in health insurance coverage. 2 In fact, it has been pointed out that the average annual rate of increase in surgical fees was substantially greater for the period 1945 to 1950 than from 1950 to 1958, although the extent of health insurance coverage was greater during the latter period. 3 Such evidence does not support the