Why changes in the U.S. healthcare policy have caused healthcare costs to rise.
Americans are contributing more of their income and having higher health insurance deductibles based on data collected since 1984 for a study by the research department of Clever Real Estate.
Clever Real Estate is a free online service that connects individuals with top agents to save money on commissions. The research department conducts research on real estate, finances, business and the economy to help people understand complex data.
Research Associate of Clever Real Estate, Francesca Ortegren, PhD, says that healthcare is a hot topic issue in politics at the moment, and their findings suggest that some reform is necessary.
“We recognize that people’s ability to afford a home is directly related to other necessary costs, like healthcare,” Ortegren says. “As such, we conduct research on a variety of topics to better understand the financial climate in the U.S. and factors that may influence people’s home buying experiences.”
Ortegren says that the average American struggles to pay for their healthcare, despite legislation like the ACA aiming to make care more accessible to everyone.
“Americans are spending almost 10% of their income on health insurance-and that doesn’t account for compensation lost due to employer-paid portions of premiums,” Ortegren says. “Rising costs in healthcare have also impacted the affordability of raising a child.”
The increase of cost study collected the average household spends $5,000 per year on healthcare; near 10% of the average $60,000 American household income.
Household healthcare costs have increased by about 101% since 1984-the majority of that increase is due to a huge surge in health insurance prices, which have increased by 740%, Ortegren says.
Briana Contreras is associate editor for Managed Healthcare Executive.
During that same time period, wages only increased about 18%, so a larger proportion of people’s annual income is going toward healthcare now than it was in the 80s, she adds.
Related: The State of Employer-Sponsored Healthcare
“Health insurance premiums have increased rapidly, as well; and the brunt of that financial responsibility has been shifted toward employees (in the case of employee-sponsored insurance plans),” she says. “While the employers are spending more than they were in 1999, the proportion of the premiums paid by the employee has steadily increased, nearly tripling the proportion of income people are spending on health insurance.”
In addition, non-group or individual insurance premiums have increased more slowly than employee-sponsored premiums, but now Americans are spending about the same, annually, toward premiums on average.
Non-group premium increases, along with changes in ACA rules-particularly those related to required coverage-have led to more people going without coverage since 2017.
Ortegren suggests healthcare executives should consider a few facts when making strategic plans:
Briana Contreras is associate editor for Managed Healthcare Executive.
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