Why do health care prices keep going up? Why is it that, over time, the cost of health care has exceeded the ability of almost everybody to pay for it out-of-pocket? Ask this question of 10 different people, and you'll likely get 10 different answers, with blame dropped on HMOs, burgeoning technology, greedy doctors, malpractice insurance, socialized medicine, and a whole list of other bad guys. It seems that practically no one from Obama to Limbaugh can remember what causes prices to go up, and up, and up.

Let's review basic economic theory. The law of supply and demand tells us that when demand for a product or service increases while supply remains unchanged, the price will go up. When supply increases and demand remains the same, the price will go down. When supply decreases and demand remains the same, the price will go up. When demand decreases and supply remains the same, the price will go down. Given enough time for market influences to play themselves out, these patterns will always produce these results.

Okay, now I think we can all agree that health care prices have gone up, and up, and up. They've been doing so for more than 50 years. So the question is: why? What's changing in the supply/demand equation?

Well, certainly part of it is that there are more people alive today than there were 50 years ago. On the other hand, there are more doctors, nurses, and hospitals than there were 50 years ago. There is also more new technology than there was 50 years ago. But there's also another factor that has changed, one which gets very little attention. Before I tell you what it is, consider this question: why has the cost of health care so dramatically outpaced the rate of inflation over the past 50 years?

Give up? The other factor is the supply of money. If you increase the amount of money available for the product or service in question, the price will always go up. No exceptions. This is the price of monetary inflation. But it's not the only way that the supply of money affects prices. Prices will also go up if you force money to be spent on that product or service. Every time, without exception. It doesn't matter where the money comes from. It doesn't matter whether the money is a tax dollar or an insurance dollar or a personal dollar. The mere act of forcing someone (or even inducing someone) to spend it on health care must always contribute to the rising cost of health care. Period.

This is the major cause of the rise in prices of anything where government chooses to involve itself. Even if there were no change in the number of buyers and no change in the number of sellers, and no change in the products or services, if you shovel more money to the buyers or force them to spend more of their own money for a particular product or service, the price of that product or service will go up, every time over time, without exception.

This is exactly what happens every time government tries to solve a problem like health care. If they allocate tax dollars to spend on some aspect of health care, the price of health care will always go up over time. If they pass a regulation which forces people (or insurance companies) to spend money on some aspect of health care, the cost of health care will go up. If they give a tax deduction to taxpayers for spending money on some aspect of health care, the cost of health care will go up. This includes employer tax deductions for health insurance, Medicare, Medicaid, federal and state regulations of health care and health insurance, HMO formation, HMO reform, malpractice insurance, new drug testing, etc., etc.

It happens every time, without exception.

Since Barrack Obama is the new President, he gets the current blame. But he's not the only one. Every President in modern history over the past 50+ years is guilty of the same conduct…using government to increase the cost of health care. Nor is Obama the first to claim that his particular plan will not drive the cost of health care up. The same claims apply to Presidents named Bush, Clinton, Reagan, Carter, Ford, Nixon, Johnson, Kennedy…. The list goes on and on.

Nor does it apply to just Presidents. Congresses have done the same thing over and over. Republicans and Democrats throughout the years have claimed repeatedly that their plan would keep costs down, that it was the other guy's play that would increase the cost of health care.

Every one of them, every President, every Senator, every Congressman who made such a claim, was lying. We know that they were lying because every government requirement in health care, every tax dollar spent, every regulation, every control, every… everything the government does drives the cost up.

Period. No exceptions.