Nobel laureate Robert Fogel explains why healthcare costs are rising so fast in an article titled Forecasting the Cost of U.S. Healthcare

The main factor is that the long-term income elasticity of the demand for healthcare is 1.6—for every 1 percent increase in a family’s income, the family wants to increase its expenditures on healthcare by 1.6 percent.

Hat tip Greg Mankiw who also recommends James DeLong's article Maybe We Should Spend More on Healthcare.