Rising Health Care Costs Hitting Family Pocketbooks

More than 40 percent of income gains over the last decade now spent on health, study shows

THURSDAY, Sept. 8 (HealthDay News) -- Health care costs have risen faster than the cost of other goods and services in the United States over the past decade, leaving many Americans financially worse off, according to a new RAND Corp. study released Thursday.

Although the median-income American family saw a 30 percent jump in income from 1999 to 2009, health spending grew much more quickly and largely wiped out these gains, the researchers reported.

Translated into dollars, the findings mean that a typical family of four had a monthly income growth of $1,910 over the decade but had to spend 40 percent of that on health care costs, the researchers said. And that same family now has only $95 a month in extra income once health care costs, taxes and higher consumer goods prices are calculated.

"Accelerating health care costs are a primary reason that so many American families feel like they are just treading water financially," the study's lead author, David Auerbach, an economist at RAND, said in a news release from the nonprofit research organization. "Unless we reverse the trend, Americans increasingly will notice that health costs compromise their other spending options."

Between 1999 and 2009, total spending on health care in the United States nearly doubled to $2.5 trillion and individual health care spending surged from $4,600 annually to slightly more than $8,000 a year, according to the report.

In addition, monthly health insurance premiums grew by 128 percent, to an average of $1,115, and out-of-pocket spending surged 78 percent.

But although many health care costs are obvious to Americans, like premiums, co-pays and deductibles, additional costs that impact a family wallet include:

  • Employers' share of the monthly premium for private health insurance, which reduces an employee's total compensation.
  • Taxes supporting government health programs such as Medicare, Medicaid and the military health care system.

"The complex way that the United States pays for health care often obscures the consequences of health care cost growth for most American families," said the study's co-author Dr. Arthur L. Kellermann, director of RAND Health, in the news release. "This makes the challenge of controlling health care costs that much harder."

The study findings were published in the September edition of the journal Health Affairs.

More information

The U.S National Library of Medicine has more about health care costs.

Mary Elizabeth Dallas SOURCE: RAND Corp., news release, Sept. 8, 2011

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