“The trend of increasing service costs defined many of our economic debates for a decade. There was just one small problem — by the time we started talking about how to address this trend, the trend had changed…

Until around 1990, health spending rapidly ate up a bigger and bigger portion of our national income. Then the increase slowed down, but it did go up some more until around 2009. But after that, it leveled off; in 2024, Americans didn’t spend a greater percent of their income on health care than they did in 2009…

Higher education has been getting more affordable for years, and the decrease in affordability in the late 2000s and 2010s was significantly overstated. The popular narrative that college is getting less and less affordable is wrong…

These changing trends don’t mean that services are cheap and we can stop thinking about service costs. First of all, there are still some services that are getting less affordable over time — most notably, child care. Second, the recent mild increases in affordability for health care and higher education haven’t erased the big cost increases that happened in the 1980s, 1990s, and early 2000s; Americans still pay a lot more for these things than Europeans or Asians do, relative to their incomes. So there’s still probably scope to bring down the costs of health care and college.

But with all that said, the change in the trends in service costs and service productivity mean that our debates about these topics need to change.”

From Noahpinion.