Tyler Cowen points to an intriguing graph:
. . . and asks "what happened in 1980?" If I had to guess, I'd say "some sort of data discontinuity", but other than that, I don't know.
I do, however, have a plausible candidate for what happened in 1986, when the thing starts rising briskly over a period of years: the Reagan tax simplification. It got rid of a lot of the ability to expense lifestyle enhancements for workers, but left an important one intact: the deduction for health care.
You can argue that the employee health care deduction basically explains the entire cost differential between American systems and the others. Take a look at this graph (you'll have seen some variant of it many times during the health care debate, but I got this particular one from a presentation by Scott Atlas at Hoover last month):
Are you getting this? Let me make it clear. The PPACA may make it possible for workers to get the same tax break for purchasing health insurance on the individual market (via an exchange or otherwise) as they would if they bought their employer-sponsored plan (if they're offered one). If this is the case, it removes one huge incentive for maintaining employer-sponsored coverage. With respect to taxation, it levels the playing field between the group and non-group (individual) markets.There are some economic efficiency arguments for doing this, but it's not going to help us control costs. Perhaps quite the opposite.
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