There is a whole lot of misinformation about the costs of health care in the U.S., the factors behind the costs, who benefits, who pays, and what needs to be done to bring it under control. This essay addresses the main economic issues at work that can shed light on this subject. As you have already discovered, politicians have muddied the surrounding waters because it is in their interests to do so.

Words are not good substitutes for graphs, however, and the AuthorsDen format is not friendly to graphs. That is not an entirely bad thing because graphs can also be troubling for many readers. I will therefore seek simplicity through the power of 3rd grade logic, my favorite explanatory tool.

Let’s begin with competition. While it is true that competition helps to hold costs down for most goods and services through the mechanism of comparison shopping, in fact there is very little competition within the broad segment of a health care delivery system. Here’s why:

Competition depends on consumer knowledge about the good or service being offered. A bushel of apples or the quality of a hair cut is easy to compare by almost anyone. Health care, however, is broken down into 20 or more different specialties. Most consumers cannot pronounce the names of these specialties, to say nothing about the corresponding body parts at issue for care, the costs of the various services offered, how to shop for better prices, or the drugs involved (just spelling the generic name of any drug is beyond all hope for nearly all of us). These are the conditions made-to-order for service providers to control prices. If you face a life-threatening operation, who are you to dispute that diagnosis? And what can you say if the cost is $50 or $50,000? You very likely still need the operation regardless of its cost.

Another element that brings competition into focus is the ease (or the lack) of entry into the marketplace. The skills and costs of offering apples for sale are easy to understand. But all health care specialties are regulated by licensing, which is further restricted by training, which is further restricted by school admission requirements, which is further restricted by inspections, which is further restricted by the American Medical Association which sets the standards for and controls all the preceding requirements. It is in their financial interests to hold down the number of admissions into medical school, to restrict the number of medical schools, and to be the watch dog over the whole system. This is the fundamental reason why health care costs rise at least twice as fast as inflation, and why it takes a larger and larger percent of GDP. It also explains why health care employees in general, and physicians in particular, can demand and receive very high salaries and fees.

Who pays is an important issue. Inequality of wealth and incomes puts the cost of health care beyond the reach of all poor persons and most of the middle class. Although the US has the highest gross wealth, we also have the most severely skewed distribution of wealth of all the industrialized nations. In fact, all the rest of the advanced nations have decided that health care is a right, not a privilege, and have moved to a single-payer system paid from tax revenues. But in the U.S. even the government’s contribution to Medicare, Medicaid, and VA care have not been able to completely offset the inequality gap. And that is because our per capita cost of health care is $10,000 per person, which equals $3.3 trillion per year, or 17 percent of our GDP. As a consequence, 90 percent of Americans must rely on health insurance to help them bridge the gap between their incomes and the costs of health care.

Even with the Affordable Care Act there are still huge cost coverage and cost containment issues to solve. The government’s role has been as one of the insurance payers. The government does not own the system, nor is it responsible for rising costs. Reducing the government’s role as payer can only be done by reducing or eliminating coverage for the neediest residents in the system. That can only make matters worse. The recent Congressional Budget Office analysis of changes to the government’s role supports this observation.

The current administration’s plan would drop 22 million residents from health insurance. By doing so the government’s spending cuts would allow them to give the top 10 percent huge income breaks. They also seek to eliminate the inheritance tax altogether. Both actions are political payoffs. The wealthy currently hold $85 trillion in wealth.

Even Willie Sutton understood the 3rd grade logic of the picture that is emerging in this essay. When asked why he robbed banks, he is reported to have said “because that’s where the money is.” We could cut all health care costs by 50 percent (from$3.2 trillion to $1.6 trillion), or from $10,000 per person to $5,000 per person, by issuing $1.6 trillion in US treasuries, to be injected into the health care system. This approach would raise our inflation rate considerably depending on the time period over which the injections occurred. Or we could tax that $85 trillion stack of wealth held by the top 10 percent of the population by $1.6 trillion with no additional inflation. After all, 96 percent of their wealth was not earned, but inherited.

In spite of the complexity of health care costs, we are left with a health care system that costs double that of the rest of the industrialized world. Those costs arise from a controlled supply of health care practitioners, from lack of competition due largely to consumer ignorance, rising demand for services, artificially inflated prices, and the biggest enemy of all—misinformation and greed coming from the right of the political spectrum.

One state motto is “live free or die.” Perhaps at the national level it should be “stay healthy or die.”