I’ve seen several references this morning to a new study from the Rand Corporation, published in Health Affairs, that illustrates how the rising cost of health care has impacted American families over the past decade. Basically, the study finds that although total household income rose considerably between 1999 and 2009, most of the increase is eaten up by health care costs. These costs include the obvious expenses (things like health insurance premiums and out-of-pocket expenses like deductibles and copays) as well as expenses that might not immediately been seen as costs impacting the average family: things like lower wages to compensate for employers having to pay more for health insurance, and higher taxes to pay for public and military health insurance programs.
In reading through the articles about the study, I’m struck by some of the numbers. The study mentions that the median household income in 1999 was $76,000, and that it increased by 30% over the next decade, reaching $99,000 in 2009. Both of those numbers seem quite high. Wikipedia lists the median household income in the US (in 2007) at $31,111. Other data I’ve seen indicates that median household incomes in 2009 were less than $50,000. So although it’s widely known that health care costs are rising far faster than inflation and taking an ever-increasing chunk out of family (and government) budgets, I find the details of the study to be a bit surprising.
One important point that the study raised was the fact that taxes collected in 2009 were not sufficient to cover federal health care spending that year. If we are to be realistic about health care spending, taxes would have to be higher in order to generate enough revenue to cover government health care costs. Or else we have to find a way to sharply curtail health care spending.
Health care costs are increasing for several reasons. Americans continue to get heavier, resulting in numerous obesity-related health problems. We also like our health care technology and tend to gravitate towards newer and fancier medications and equipment. And we’re somewhat insulated from the actual cost of health care because most of us have health insurance – often with an employer paying a chunk of the premiums. Although I’m a bit perplexed by the $99,000 median household income figure cited in the Rand study, I think that the gist of the study – basically the fact that health care is eating up a huge portion of family and government income in America – is important for people to understand. We can’t tackle a problem without first knowing what the problem is. And one of the obstacles in the way of curtailing health care costs in the US is that our current system is so convoluted and complex that it’s nearly impossible to see all the areas where health care spending is impacting us – at the federal, state, and household levels.