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Most U.S. households are burdened by health care costs

Harold Mandel's picture
A medical consultation

One of the hottest topics for discussion across the United States these days has been the cost of health care and health insurance. There have been mixed emotions about the Affordable Care Act with supporters of this program often as outspoken as its critics. Regardless of which side of the political agenda you stand on in dealing with health care issues in the United States, one thing is for certain in that many families simply remain as usual overburdened with health care costs.

Over the past ten years the cost of health care has increased at a faster pace than GDP and income, reports Milbank Quarterly. This situation has rolled over into decreasing affordability for health care which has contributed to personal bankruptcies. The financial realities of the cost of health care also partially explains why some of the nonelderly population is not insured.

Researchers decided to examine the trends in health care affordability over the past ten years. The researchers measured the financial burdens which are associated with health insurance premiums and out-of-pocket costs. They have highlighted implications of the Affordable Care Act for the future financial burdens of particular populations.

The researchers found that the median health care financial burden grew on average by 2.7 percent per year and by 21.9 percent over the period. It was alarmingly noted that the fraction of households which have been facing high financial burdens increased significantly. There was a clear trend over the past ten years toward an increasing share of household income being devoted to the cost of health care.

Spending for various subgroups of the population will be affected differently by the Affordable Care Act. Those becoming eligible for Medicaid or subsidized private insurance and those with expensive medical conditions are likely to have a decrease in spending. However, those who will be newly obtaining health care coverage might increase their health spending relative to their income. However, in this group economic value can be written into the gained access to care and the ability to spread their expenditures over the course of time.

This new study published in The Milbank Quarterly has been discussed in a report by the Health Behavior News Service, which is part of the Center for Advancing Health. Just about all Americans, at every income level and in every geographic area, have experienced an increased burden from health care costs since 2001.

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Linda Blumberg, Ph.D., who is a senior fellow in the Health Policy Center at the Urban Institute, has said that she and her colleagues did this study as part of a multiyear project which has had a goal of evaluating effects of the Affordable Care Act. A primary question motivating this research was what would things have looked like in 2014, ’15, and ’16 in the absence of reform. In this study financial burden was defined as the total amount of money which a household spent for both insurance premiums and their out-of-pocket health care expenses, in comparison to a household’s before-tax income.

Between 2001 and 2009 the median financial burden associated with health care costs increased about 2.7 percent annually, or about 21.9 percent. During that same time span median household income rose an average of 1.5 percent per year while payments for insurance premiums increased 7.1 percent and out-of-pocket health costs increased 1.2 percent on average annually. The authors wrote, “These increases were felt by households of all ages, incomes, and health status all over the United States."

Len Nichols, Ph.D., professor of health policy at George Mason University, has said this study shows convincingly that health care is becoming less affordable over time for almost everyone. However, Nichols also says that some insured people who have to buy better new policies may pay more after reform than they used to pay, but they will probably get better coverage. It is his position that although financial burden analysis is significant, it is not necessarily the final word on the wisdom of recent policy changes.

It appears to me that there is a great deal of confusion and anxieties surrounding the Affordable Care Act. Clearly, from a humanitarian perspective any civilized country would want affordable and quality health care coverage to be available for every citizen of the country. The financial realities of the present economic situation in the United States make it clear that the Affordable Care Act does not even come close to accomplishing this utopian goal. Although it is an interesting point by Nichols that people who have to pay more for health insurance now will probably at least get better coverage, this does not solve the problem. I see people getting sick with anxiety, depression, high blood pressure and other chronic illnesses from the stressors associated with economic problems daily.

So this supposed better coverage may be used in many instances to pay for treatment of new serious illnesses created by this situation as more and more families split up in divorces due to economic hardships and more kids suffer in foster homes after child protective agencies carry them away from their bankrupt parents in tears. There are also the growing numbers of completely impoverished and homeless people across the United States for whom all of these so called reforms have absolutely no meaning at all.

In my opinion the bottom line is therefore the only way to make high quality health care more affordable and more desirable for more Americans will be to create more stronger economic opportunities for more Americans who want to work for a living. The government should be investing more in job and wealth creation opportunities for as many Americans as possible instead of focusing on creating a massive welfare state.

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