CAHC is concerned health costs are too high and rising too fast.
Health costs for working families, who receive coverage through employers, have grown dramatically faster than pay. The two trends are connected: rising premiums soak up raises that otherwise would boost living standards.
Since 2010, the medical cost trend has grown by 73 percent, about four times faster than the average wage and five times faster than the Consumer Price Index. Because costs (total, out-of-pocket, premiums, etc.) are rising faster than wages, health coverage is becoming less and less affordable. If current trends persist, the typical family will spend more than 50 percent of their income on health care by 2030.
In 2019, this medical cost trend once again is expected to rise 6 percent.
Behind the rise in health costs has been relentless inflation at the point of care. America spends about seventy percent more, as a share of GDP, on health care than the rich country average, yet has some of the lowest life expectancies across practically every socioeconomic group at practically every age. This unhealthiness stems in part from an epidemic of chronic diseases, including opioid abuse. Compounding these costs is widespread waste. In addition, the price of health services are significantly higher in the U.S. than in peer countries. Prices are highest in private insurance markets, where employer-sponsored health plans pay roughly twice as much as Medicare and Medicaid for common tests and procedures. In 2019, health costs for a working family of four will average almost $30,000.7
This primer summarizes the magnitude of and composition of U.S. health spending, the drivers of medical costs and the interactions between them. We conclude with several recommendations for reform that directly address the problems confounding affordability.Download the White Paper
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