Healthcare spending with other people's money

Prof Mark Perry found a very good explanation to the rising healthcare costs

According to Dr. David Gratzer of the Manhattan Institute, in 1960 about half of health-care expenditures were directly controlled by consumers. Today, it is about 15%. Over the same period in which consumers have relinquished control, per-capita health-care spending has quintupled and costs have skyrocketed.

He then suggests the following example:

Now imagine how your spending on food, travel, clothing, automobiles, cell phone plans, housing, etc. would change if you only paid 15% of the total cost out-of-pocket.
1. You'd eat a lot better, and so would your dog, e.g. you'd both eat a lot more steak.
2. You'd always travel first-class.
3. You'd get a Jaguar instead of a Ford Focus, or you'd get 2 Ford Focuses instead of one.
4. You'd get 2,000 minute per month plan, instead of a 500 minute plan.
What would happen to the prices of food, cars, etc.? Up, Up, Up.

And another interesting quote from PJ O'Rourke: If you think health care is expensive now, wait until you see how much it costs when it is free.