Before the National Health scheme was introduced, more than 80 percent of all Impanian medical costs were associated with procedures that are now covered by the scheme. The proportion of total expenditures within Impania that is spent on health care has declined since the introduction of the National Health scheme. Impanians now buy private medical insurance only at times when they expect that they will need care of kinds not available in the National Health scheme. The National Health scheme has greatly reduced the number of medical claims handled annually by Impania's private insurers, enabling these firms to reduce overhead costs substantially.
Since the introduction of the Impanian National Health scheme, Impanians (or their private insurance companies) have had to pay only for the more unusual and sophisticated medical procedures. When the scheme was introduced, it was hoped that private insurance to pay for these procedures would be available at modest cost, since the insurers would no longer be paying for the bulk of health care costs, as they had done previously. Paradoxically, however, the cost of private health insurance did not decrease but has instead increased dramatically in the years since the scheme' s introduction.
Which one of the following, if true, does most to explain the apparently paradoxical outcome?