A quick lesson in healthcare mathematics.
In the June 28th 2013 CDC Morbidity and Mortally Weekly Report (MMWR), there is a “Quick Stats” article comparing 2001 to 2011 data on the percentage of uninsured Americans under the age of 65 who did not have health insurance due to cost. While there were options to choose from such as loss of public or job-provided insurance, employment status, marital status, change in educational status, and age, by far the most significant reason for not having health insurance was cost.
This is not to say that the US has not shown some modest signs of improvement in the decade under review. As one can see from the CDC graph, for each population group, the number of uninsured who considered cost to be a factor has decreased. What is troubling, however, is that cost is a significant, if not the predominant, reason for not having health insurance.
Percentage of Uninsured Who Reported that Cost is a Factor for not Having Insurance
Source: CDC MMWR Vol. 62, No.25, June 28, 2013
But here’s a more troubling set of numbers that may serve to explain why we are in such a predicament. The Milliman Medical Index published in May 2013 documented medical costs for a family of 4 from 2002 to 2013. For this period, medical costs have more than doubled from $9,325 to $22,030. To put this in perspective, the report noted that the annual cost of healthcare for that family is now nearly identical to purchasing a brand new Chevrolet Cruze.
The final set of numbers I want to share is the Average Wage Index published by Social Security. In 2001, it was $32,921.92 and grew to $42,979.61 in 2011. This equates to a wage increase over this 10-year period of 31%. Taking this all into account, a decade ago the percentage of healthcare cost to average wage accounted for less than 1/3 of the average wage. In 2013 for the same family of 4, the cost of healthcare is now over 1/2 the average annual wage.
So now that we have all this data, how best to use all these numbers? My interpretation is that Americans are willing to spend an ever-increasing portion of their income for healthcare but as evidenced by the MMWR report, this is simply not possible for many.
The second, and perhaps the more dominant concern, is how can we stabilize healthcare costs and flatten the steady increase seen in the Milliman study. “Obamacare” is not going to address this problem. In fact a number of reports indicate that for the foreseeable future the global cost of healthcare will continue to grow at an ever-increasing rate. The problem is that while all Americans deserve access to insured healthcare, no agency or organization is willing to accept the challenge of how best to contain the costs associated with this.
And to prove my point, I’d like to share a final set of numbers. From 2000 to 2010, healthcare inflation rose 48% while for the same period, the overall Consumer Price Index had risen only 26% (source: U.S. Bureau of Labor Statistics data).
You do the math.