American families only $ 95 off better in 10 years because of rising health care costs
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A median-income American family is only $95 per month better off today than ten years ago because rising health care costs have eliminated virtually all their income gains, researchers from the RAND Corporation revealed in the journal Health Affairs. Had health care costs risen in line with other goods and services those families would have had an extra $545 disposable income per month in 2009.
Economist David Auerbach, the study's lead author, said:
"Accelerating health care costs are a primary reason that the so many American families feel like they are just treading water financially." "Unless we reverse the trend, Americans increasingly notice that health will costs compromise their other spending options."
Between 1999 and 2009 in the United States: health care spending rose from $1.3 trillion to $2.5 trillionHealth care spending per person rose from $4,600 to just over $8,000.13.8% of country's GNP (gross domestic product) was spent on health care in 1999. It rose to 17.6% in 2009.These numbers may be sobering, but they do not translate to the daily routine of typical American families easily, mainly because health care costs are not all clearly visible, the authors wrote.
To describe the hidden burden that ever increasing health care expenditure placed on a median-income family consisting of two parents with two children, with employer-sponsored insurance from 1999 to 2009, Auerback and Dr. Arthur L. Kellermann gathered various data together from several sources.
American families can see health care costs in two ways: through the amount they have to pay every month on their private health insurance premiumThrough out-of-pocket expenditure for deductibles, drugs, copayments and other itemsHowever, the researchers say there are other less visible costs: for an employer to be able to pay a share of the worker's premium, his/her wages and other compensation are usually reducedA proportion of the family's income goes towards paying for federal and state taxes which are devoted to such health programs as Medicaid, Medicare and the military health had on annual income of $76,000 in 1999, care system the median-income family in the United States this grew to $99,000 in 2009, on increase of 30%. However, health spending increased at a considerably greater rate. Monthly health insurance for families rose from $490 to $1,115 (128%), and out-of-pocket expenses from $135 to $240 (78%).
Public expenditure on health rose by 76% at state level and 140% at federal level.
As federal tax rates dropped during the ten-year period, the portion of family's tax bill that went towards health care costs – from $345 to $440 did not fully reflect this increase.
Therefore, families had much less money to spend because of rapidly rising healthcare costs.
A typical family's income rose by approximately $1,910 during the decade. Over 40% of that went on higher health care costs. Increases in the cost of consumer goods plus non-health care taxes absorbed a further 53%, leaving the average median-income family with a mere $95 extra money in their pockets at the end of each month.
Kellermann said:
"The complex way that the United States pays for health care often obscures the consequences of health care cost growth for most American families." "This makes the challenge of controlling health care costs that much harder."
The researchers worked out that if health care costs had risen by 1% more than the annual GDP rise, the median-income family would have had $335 extra cash at the end of the month at the end of the decade, and $545 if health care costs had risen the same as the overall inflation rate during that period.
The target set by the affordable care Act is a 1% higher increase in health care spending than the increase in GDP.
Written by Christian Nordqvist
Copyright: Medical news today
Not to be reproduced without permission of medical news today
David I. Auerbach1, and Arthur L. Kellermann
Health Affairs doi: 10.1377/hlthaff.2011.0585 health AFF vol. September 2011. no 30. 9, 1630-1636 Please use one of the following formats to cite this article in your essay, paper or report:
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Christian Nordqvist (2011, September 8). American families just $95 dollars better off in ten years because of rising health care costs. Medical news today. Retrieved September 9, 2011 from http://www.medicalnewstoday.com/articles/234126.php MLA
Christian Nordqvist. "American families just $95 dollars better off in ten years because of rising health care costs". Medical news today, September 8, 2011. Web. 9 Sep, 2011.
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