Across the spectrum, from boardrooms to living rooms, problems in the health system are a top concern.[1] This is not a surprise: health care costs are high, and rising even higher. The United States spent about $2.1 trillion on health care in 2006, an amount that is twice what it was in 1996 and half as much as is projected for 2017.[2] Health costs strain American businesses, which directly finance about one-fourth of health system spending.[3] Employer-sponsored health insurance premiums rose by 98 percent between 2000 and 2007--four times faster than cumulative wage increases.[4] This in turn affects families. The average cost of a family, employer-based insurance policy in 2007 was $12,105, nearly the full-year, full-time earnings of a minimum wage job.[5] In addition to high premiums, people are paying higher amounts for deductibles and service use. Between 2001 and 2004, the number of non-elderly Americans spending more than 10 percent of their income on premiums and cost-sharing jumped by six million, or about 15 percent.[6] The issue also has a profound impact on seniors: the typical couple may have to save nearly $300,000 to pay for health costs not covered by Medicare alone.[7]

Joseph Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at AEI.

The full text of this paper is available here as an Adobe Acrobat PDF.

Notes

1. R. Teixeira, Public Opinion Snapshot: Americans Agree, Time for Action on Health Care, January 18, 2008, available at http://www.americanprogress.org/issues/2008/01/opinion_health (accessed May 26, 2008).
2. Office of the Actuary, Centers for Medicare and Medicaid Services, National Health Expenditure Data for 2006. U.S. Department of Health and Human Services, available at: http://www.cms.hhs.gov/NationalHealthExpendData/ (accessed May 26, 2008).
3. Better Health Care Together, Health-Cost Crossroad: Why American Businesses Urgently Need Health System Reform, May, 2008, available at: http://www.betterhealthcaretogether.org/Library/docs/
BHCT%20Milwaukee%20Issue%20Brief%2004%2025%2008.pdf (accessed May 26, 2008).
4. Kaiser Family Foundation & Health Research and Educational Trust, Employer Health Benefits 2007 Annual Survey. (Menlo Park, CA: Kaiser Family Foundation, 2007).
5. Kaiser Family Foundation & Health Research and Educational Trust, Employer Health Benefits 2007 Annual Survey. (Menlo Park, CA: Kaiser Family Foundation, 2007).
6. J.S. Banthin, P. Cunningham, and D.M. Bernard, "Financial Burden of Health Care, 2001-2004," Health Affairs 2008; 27 (1): 188–195.
7. Employee Benefit Research Institute, Savings Needed to Fund Health Insurance and Health Care Expenses in Retirement, (Washington, DC: EBRI Issue Brief #295, July 2006).