Someone bumped into my car in a parking lot but wasn’t decent enough to leave a note. The hood of my car was damaged. I went to two reputable body shops. One quoted $850; the other quoted $740. As body work goes, it’s a small job. Because the bill isn’t much more than my deductible, I decided to pay out of pocket and not bother with an insurance claim.
Both body shops told me if insurance is involved, the repair bill will be over $2,000. They will have to fix it "the right way." Instead of just repairing the hood, they will have to replace the hood and repaint the fenders to match the color. Both also told me I will not notice any difference with my untrained eyes if I only have them repair and repaint the damaged area. Since I’m paying the bill, I chose the lower-cost option.
What if the driver who caused the damage gave me his or her insurance information? Guess which option I will choose? Fix it the right way, of course, however marginal the quality difference may be. I don’t have to care if I’m spending other people’s money.
Think about it for a moment where this "spending other people’s money" phenomenon exists. It happens all the time in health care. Although I don’t watch much TV, I’ve seen plenty of ads for powered wheelchairs because "Medicare pays for it." If you give people money, they won’t necessarily use it to buy a powered wheelchair. But if Medicare pays for it and there’s no way to get paid cash if you don’t ask for one, then why not? And you wonder why health care is so expensive.