Part of the reason eyeglasses are so expensive is "vision insurance", which is not insurance at all. By definition, insurance is the spread of risk of a high-cost, low-probability event over a large population so that no individual has to pay a huge sum if the event occurs. For instance, eye insurance would have a small premium that would pay out if an eye injury occured that required very expensive medical care. However, modern "vision insurance"

1. won't pay if you injure your eye

2. doesn't spread any risk over a population

Instead of reducing risk, vision insurance simply spreads a known cost over a period of time. If each customer would pay $240 / yr on eyeglasses, it allows them to instead pay $20 / mo. That is not insurance -- that's a payment plan!

So, why does it exist and why does it increase price? Very simply, vision insurance can be provided by a company to its employees and deducted as an expense. This allows the employee to avoid paying personal income tax on wages, which would happen if the $240 were provided directly to the worker. Thus, it is cheaper for the company to provide vision insurance than to increase wages to provide $240 in after-tax take home pay.

Because the money tied up with vision insurance can not be used for anything other than glasses (e.g. you can't cash out a vision plan and spend the money on video games or travel), there is no incentive for the end customer to spend less on glasses. They will want to spend as much as possible while still remaining below the maximum budget from the plan. As a result, this distorts the normal financial incentives in a marketplace.

As a result of the favorable tax position and lack of cost incentives, vision insurance inflates the price of eyeglasses and exploits a de facto subsidy from the taxpayer to the eyeglass company. This increases the profits of the eyeglass company (owned by Luxottica) at the expense of the consumer (and to the detriment of anyone who buys their glasses out of their own pocket)