According to Gallup polls, Americans have cited health-care costs as their top financial concern for roughly the last five years. This source of anxiety generally surpassed, or was even with, low wages despite incomes rising relatively slowly over the last several years. Politicians on the stump blame drug companies for Americans’ concerns, but, as we have pointed out, nearly three-quarters of Americans currently taking prescription drugs say it is “easy” to afford them.
A recent Kaiser Family Foundation analysis identified the true root of Americans’ worries: rising out-of-pocket health insurance costs.
KFF found that in 2018 a family of four who had health insurance through a large employer spent an average of $7,726 out of pocket, including $4,706 on premiums and $3,020 on deductibles, co-pays, and co-insurance. That total ($7,726) was $3,709, or 67 percent, higher than it was in 2008.
As USA Today explained, that means out-of-pocket costs for employees now equal the price of one of America’s true luxuries – a Harley Davidson motorcycle. Then again, that only is the employee share of health insurance. If we add in employers’ share, a family could buy something a little bit more practical like a Honda, because their wages would be higher.
The rapid rise in out-of-pocket health costs was twice the increase in wages over that decade. Additionally, according to POLITICO Pro (subscription required), “Deductibles rose at 10 times the rate of inflation and accounted for nearly half of workers’ cost-sharing payments in 2017, up from a quarter in 2007.”
According to health-care reporter Noam Levey, it is the rising deductibles that are causing Americans’ growing anxiety. In the Los Angeles Times (hat tip: Axios), Levey wrote, the deductible increases have “worsened inequality, fueling anger and resentment and adding to the country’s unsettled politics.”
The Axios article says the rising out-of-pocket costs have caused Americans (and their state and federal representatives) to focus on drug prices, but when commenting on the organization’s report, a KFF spokesperson did not cite drug prices. Cynthia Cox, vice president at the Foundation, told CNBC, “Insurance companies get a lot of heat for raising deductibles and premiums, but if you look at what’s driving health-care costs year to year, it’s the price of health care: the cost of doctor’s visit, the cost of a hospital stay. … That’s really what’s making those premiums and deductibles go up each year.”
As if on cue, the Kaiser study coincided with the release of an analysis by UnitedHealth Group, an insurer, that found the price of hospital visits in the United States increased by 19 percent between 2013 and 2017. As this article explained, factors in that rise “include avoidable emergency room visits, physician specialists who charge high rates, and hospital costs for things like blood tests and beds,” all of which “have gone up significantly in recent years.”
Americans are anxious, but drug prices are not the source or their worry.