Putting Costs Into Perspective

Putting Costs Into Perspective

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Ian Morrison, at The Health Care Blog, has written an excellent article about the cost of health care.  When we hear that the US spent $2.5 trillion on health care last year, the number is so big that most of us can’t really get our heads around it.  But Ian’s article helps to put it into perspective.  Basically, the average American household earns about $50,000 a year, and the average household medical expenses are $15,000 per year.  Some families earn far less than $50,000 and some earn vastly more.  At the same time, some people spend nothing on health care while others have millions of dollars in expenses.  But if we look at the averages across the entire population, we’re spending 30% of our income on healthcare, and health care costs are currently increasing at a much faster pace than wages.

This is definitely worth noting, and I think that this is a much more effective strategy than talking about numbers in the billions and trillions.  One of the main problems that I see when it comes to health care reform is the difficulty in getting everybody on the same page.  Nearly 60% of Americans get their health insurance from their employer, and are often totally unaware of the full cost of either their health insurance or their health care (since the employer pays for part of the health insurance and the insurance pays for a good chunk of the health care).  In addition, families that earn significantly more than $50,000/year may be unaware of how difficult it is to pay for health care on an average household income.

By looking at averages, and talking about numbers that are much easier to conceptualize, we can make it easier for people to understand the scope of the health care cost problem.  And looking at the problem in terms of averages shows why we can’t just increase taxes on wealthier families in order to make the problem go away.  There just isn’t enough money to go around.  As Brad Wright explains, even if we redistributed income and expenses completely, so that every household in American earned exactly $50,000/year and spent exactly $15,000 on health care, we’d still be struggling to pay for health care (only in that scenario, we’d ALL be struggling, rather than the way it is now, with some families crushed completely by health care expenses, and others unaware of how much their health care costs in the first place).

Until we address costs, we’ll never solve the problem.  But until we get the majority of people to really understand the problem of cost, we’ll never begin to solve the problem.

I found Ian and Brad’s articles via the Health Wonk Review, hosted by Brady Augustine at Medicaid First Aid.

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