These incremental dollars lift the value -- the “cost” -- of everything that helps capture these revenues, from doctors to devices to hospital administrators. Remember, every “cost” in health care is simply someone else’s “price” for their services and goods; pushing up the demand curve for health care pushes up all of these demand curves, too.

There is probably no health-care expert who hasn’t looked at some data point in the health-care economy -- doctors' salaries, hospital overhead, pharmaceutical marketing, paperwork, you name it -- and concluded that if we could just cut the cost of this one obviously wasteful or overpriced service, the overall cost of care would fall.

Unfortunately, this confusion between cause and effect isn’t just of semantic or academic interest; it drives policy. Rather than rely on markets or actual consumers to discipline costs, health care relies on the efforts of big intermediaries -- insurers and government -- to use their supposedly superior knowledge of real costs to identify and control the excess.

Yet there’s no such thing as a true underlying cost by which to measure excess. Sure, a sudden increase in the price of beef may cause a spike in ballpark hot dog prices (assuming there’s some beef in them). Over time, though, the “cost” of every input in baseball -- player salaries, executives, even uniforms -- depends only on how much we fans are willing to pay to attend, watch and buy all things baseball. In health care, it’s the same: As long as society is willing to add more air to the balloon of the health-care economy, the overall costs of all things health care will rise. Government policy is the baseball fan of health care.

But hold on, you might ask: Doesn’t the success of other developed countries in controlling costs confirm the conventional wisdom? Lower prices for almost everything seem to underlie their greater success in managing overall health spending. Perhaps counterintuitively, it’s the other way around: Prices (or costs) are lower in other countries because they’re not willing to spend as much on care as we are.

All other developed countries use some mechanism to limit demand, subjecting it to either absolute budgets or insurance mechanics that delay or prevent certain treatments. It’s this limiting of demand that makes price controls effective: Only by restricting how much air a society blows into the health-care balloon can a nation control pressure on prices and costs.

In contrast, in the U.S., the goal of health policy is to ensure that everyone receives whatever health care they “need.” Because there is no objective measure of need, the industry can endlessly expand what people consider necessary. So our uniquely unbudgeted public entitlements -- and insurance structured as uncapped benefits -- continuously add dollars to the industry, making effective price discipline impossible.

Many supporters of a single-payer system in the U.S. believe it could maintain open-ended coverage while controlling prices to keep costs down. But these objectives are incompatible.