Cover: A Decade of Health Care Cost Growth Has Wiped Out Real Income Gains for an Average US Family

A Decade of Health Care Cost Growth Has Wiped Out Real Income Gains for an Average US Family

Published in: Health Affairs, v. 30, no. 9, Sep. 2011, p. 1620-1636

by David I. Auerbach, Arthur L. Kellermann

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Abstract

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. By contrast, had the rate of health care cost growth not exceeded general inflation, the family would have had $545 more per month instead of $95—a difference of nearly $5,400 per year. Even the $95 gain was artificial, because tax collections in 2009 were insufficient to cover actual increases in federal health spending. As a result, we argue, the burdens imposed on all payers by steadily rising health care spending can no longer be ignored.

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