Friday, July 31, 2009

Health care cost burden on working families

The Burden of Health Care Costs for Working Families — Implications for Reform, which appeared in this week's New England Journal of Medicine, is very much worth reading.

Their graph of incomes net of health care makes several points from their analysis and extrapolation of recent trends:

0) The rich have been getting richer much faster than the middle class.

1) The growing incomes of the rich have outpaced the growth in their share of health care costs.

2) The incomes of the upper middle class have barely kept pace with their share of health care costs.

3) The incomes of the middle class will NOT keep pace with their share of health care costs.

The article makes the very important point that few people understand how much they are paying for health care RIGHT NOW, because so much of that cost is hidden below the surface. Here's a representative case study from the article.

Thomas Jones is a 42-year-old cable television technician. He receives employer-sponsored health insurance for his family and contributes $260 a month toward his premiums. He earns $37,000 a year, excluding health benefits, and his wife earns an additional $11,000 as a part-time retail sales associate.

Health care accounts for 25% of the compensation for this median-income family. Only 8.6% is visible as employee contributions to premiums ($3,100) and out-of-pocket expenses ($1,952). The rest (16.5%) is paid by his employer with wages that Thomas otherwise would have received ($6,482) and by the government from a share of the taxes paid by the Jones family ($3,175).

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