Even as increases in health care premiums have generally slowed under Obamacare, those costs represent a bigger chunk of Americans’ overall household income because of stagnant wage growth.
That’s the finding of a new report from private health research foundation The Commonwealth Fund. The report indicates in 2013, the average combined health care premiums of employers and employees totaled more than 20% of household income in 37 states. The group says 10 years earlier, it was just two states.
Yahoo Finance Senior Columnist Michael Santoli says that tells us a lot about the financial squeeze many Americans are facing.
“It shows that at the midlevel, there’s just not a lot of disposable income spending going on,” he notes. “Even if in general health care inflation is slowing down, it doesn’t necessarily feel that way, and so you have a little bit less in that disposable income category.”
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The report finds 31 states and the District of Columbia saw a slowing of premium increases between 2010 and 2013, but wage growth was even slower. No surprise there, says Santoli.
“Incomes at the median haven’t been rising very much and people have had to cover more of their health care insurance expenses,” he points out. “That makes it tougher to meet those cost obligations.”
And Santoli says higher health care costs are one of the few things holding back the consumer recovery.
“Things are better,” he notes. “Energy costs being down, jobs being up, all that means the consumer is in improving shape. But this is just one drag on it that for a lot of households is definitely meaningful.”
However, Santoli notes that it’s hard to know how much of the bigger health care bite is price inflation…or just more purchases.
“People are literally buying more health care,” he says. “It’s not as if every unit of health care has gotten more expensive. They’re either being compelled or they’re deciding to buy more.”
And that is making measuring health care costs a little blurry.
“It just changes the interpretation of consumer spending trends,” he adds. “Because health care spending-- even if it’s covered by government plans or employer plans-- it kind of gets thrown in the bucket of consumer spending.”
Santoli believes there is a light at the end of the tunnel in the effort to contain soaring health care costs…but it’s a long tunnel.
“The research is showing that it is working because of structural changes in the health care industry,” he points out. “So I do think there is hope there, but it doesn’t seem to feel that way, at least very soon.”