Health Care Cost Growth and Income Gains

Back from a wonderful trip to Botswana and Zambia.

I noted a remarkably skewed analysis of the impact of the health care bubble on gains in household income the last ten years in Health Affairs.

They note:

Although a median-income US family of four with employer-based health insurance saw its gross annual income increase from $76,000 in 1999 to $99,000 in 2009 (in current dollars), this gain was largely offset by increased spending to pay for health care. Monthly spending increases occurred in the family’s health insurance premiums (from $490 to $1,115), out-of-pocket health spending (from $135 to $235), and taxes devoted to health care (from $345 to $440). After accounting for price increases in other goods and services, the family had $95 more in monthly income to devote to nonhealth spending in 2009 than in 1999.

The analysis is unrealistic and understates the impact of health inflation by focusing primarily on those with employer based insurance. The population without such insurance has almost certainly lower income and higher insurance costs, if they are covered at all.

More here:

Copays have increased as well, the authors pointed out. In 1999, the average copay for a doctor’s visit was in the range of $5 to $10, but by 2009, it ranged from $20 to $30. Copays for visits to the emergency room were rare in 1999, but a decade later, they cost $100 or more.

In addition, taxes devoted to healthcare — for Medicare, Medicaid, the military health system, and the Department of Veterans Affairs — increased from $345 to $440 from 1999 to 2009, Auerbach and Kellerman wrote. They added that the tax hike is “misleadingly modest” because actual growth in government spending on healthcare was much larger: 140% at the federal level and 76% at the state level. The authors said Bush-era tax cuts caused the government to collect only $6 for every $10 it spent during that 10-year time frame. (medicynical emphasis)

Medicynical note: The median household income in the US is significantly lower than stated in this article which as noted refers to those with employer based health insurance. It approximates $60,000 and has not risen much if at all over the past ten years.

As we’ve emphasized previously health care costs over ten years have inflated by 130%.

It’s amazing how much more we pay for health care than any other place in the world. It’s dubious that this will change dramatically in the near future with both parties in the pay of the medical industrial complex–though I still hold out hope that health reform is a first step toward cost containment.


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