Health Crisis: Mega-Diary

From the diaries--Chris

This is a mega-post.  For the last week, I have put together some information regarding the US' current health system.  The facts are terrible.  The bottom line is the average American is losing a great deal of economic ground because of health insurance and related costs.  I do not have any idea for what the appropriate answer is.  However, the facts indicate there is a very large problem.

The first question to ask is "why should the Democrats Focus on Health Issues?" The answer is it is the most important topic to most Americans.  In a recent CBS news survey, 28% of the respondents stated health care was the most important domestic issue, making it the number one main concern of Americans. Clearly, this is on the public's mind.  However, no one is addressing their concerns.

To explain why Americans are so concerned about health issues, it's important to see the effect of health costs on the average American.  To do this, I will use two hypothetical families and trace their financial condition for the last 5 years.

Family 1 is a single person who made $36,000/year in 2000..  He takes two prescriptions daily and his family has a history of heart disease, although these have not manifested in this particular person.

Family 2 have a husband, wife and 2 children.  Their combined income was
$50,000/year in 2000.  Everyone is in good health.

For the last 5 years, their wages have barely grown.  According to the Bureau of Labor Statistics, the average earnings increase from 2000-2004 was 3.86%, 3.22%, 3.12%, 1.71% and 2.39% respectively.  However wages have to be compared to inflation to determine the real rate of wage growth.  For the same years, annual inflation was 3.4%, 2.8%, 1.6%, 2.3% and 2.7% respectively.  When inflation is subtracted from wages, overall wage growth becomes .46%, .42%, 1.52%, -.59% and-.31% respectively for 2000-2004.

Therefore, family 1 who started in 2000 with $36,000 now makes $36,538.37 and family 2 makes $50,747.73.

According to the Kaisar Foundation, the average annual cost of medical insurance for a single person in 2004 is $3627/year and $9813 for a family.  Therefore, for our single person, his average annual premium is 9.92% of his annual income.  For the family, the premium is 19.33% of annual income.

Think about those figures for a moment.  Before any other expense is taken into account, medical insurance is already a hefty expense for both families.  However, their respective problems don't end there.  According to a USA Today article (Medical costs prove a burden even for some with insurance):"Some employers are embracing high-deductible policies -- requiring workers to pay $1,000 or more a year in expenses before insurance kicks in. Such policies are also common for the self-employed, who buy their own insurance, because premiums are generally lower."

In other words, their respective annual or monthly insurance payments don't represent either family's total out-of-pocket medical expenses. Suppose both families have a higher deductible policy to lower their costs.  If that deductible is $1000, then health costs increase to 12% for the single person and 21% for the family.  

Compounding these problems are the higher than average wage growth increase in insurance premiums.  According to the Kaisar Foundation, the average annual inflation adjusted increases for insurance premiums for 2000-2004 were 5.9%, 8.5%, 9.1%, 6.1% and 5.5% respectively.  Compare this increase with the after-inflation increase in wages for each of those years of .46%, .42%, 1.52%, -.59% and-.31% respectively.  

Up until now, I have focused on premiums.  Another important component of health care is prescription drugs.  As with premiums, escalating costs are deleteriously affecting the average American.  According to a Health System Change study titled Tracking Health Care Costs: Declining Growth Trend Pauses In 2004, spending on prescription drugs increased 14.2%, 13.5%, 13.1%, 8.9% and 7.2%.  Finally, According to a Health System Change study titled An Update on American's Access to Prescription Drugs: "In an effort to control rising prescription drug spending, health plans started using formularies more aggressively and increasing patients' out-of pocket payment requirements.."

Putting all the above facts together, we get this picture: Assuming a health plan has a prescription drug component, people are increasing spending on prescriptions at a rate that is growing faster than their annual inflation-adjusted wage increases. This is on top of the increases in their premiums and total out-of-pocket expenses caused by higher-deductibles.

So where does all of this information lead?  To bankruptcy.  According to a recent study by Harvard University:

"To investigate medical contributors to bankruptcy, we surveyed 1,771 personal bankruptcy filers in five federal courts and subsequently completed in-depth interviews with 931 of them. About half cited medical causes, which indicates that 1.9-2.2 million Americans (filers plus dependents) experienced medical bankruptcy. Among those whose illnesses led to bankruptcy, out-of-pocket costs averaged $11,854 since the start of illness; 75.7 percent had insurance at the onset of illness. Medical debtors were 42 percent more likely than other debtors to experience lapses in coverage. Even middle-class insured families often fall prey to financial catastrophe when sick."

Having insurance is no help in preventing bankruptcy.  So the heavy increases in premiums, prescription drugs and overall medical spending lead to half of the people declaring bankruptcy to do so for medical reasons.

Let's sum all this up. After inflation, wages are near stagnant for the last 5 years.  At the same time, the following areas of spending are increasing faster than wage growth: total medical spending, insurance premiums and prescription drugs.  Finally, half of people declaring bankruptcy are doing so for medical reasons, even though most had insurance.

This system is not working.

Tags: (all tags)



GOPs Environmental Disaster Means Health Problems
in the present and future..

And those problems will disproprtionately impact poor people and families, bankrupting them, in addition to killing or ruining the lives of thousands, perhaps millions of people..

The last twenty years has seen an incredible increase in the understanding that we humans have on how our presence impacts the environment, and
science has been building on that understanding to
learn more and more. However, the non-scientific world, ESPECIALLY IN THE US AND THE DEVELOPING WORLD, has been slow to act on knowledge that carries important health implications for all of us. In fact, under GOP-controlled House and Senate, and the GOP Bush administration, we have been, if anything, going back.

When combined with the GOPs anti-American predatory healthcare policies, we have been going back.

What do poor people do when faced with cancer? They put off going for tests, going to the doctor, and then, they end up dying.

Families lose breadwinners, lives are wasted..


Destroying the environment costs all of us.. forever..

Pthalates cause cancer and autism and other neurological problems.

Plasticizers cause accellerated puberty and sterility

Pollution causes athsma, and damages the immune system..

Low level radiation causes cancer..

PCBs and dioxin causes cancer...

Mercury and lead cause ADD/ADHD

All of these diseases can cost a lot of money to treat..

Passing these costs from industry on to the people is not just greedy, its criminal..

by ultraworld 2005-06-25 08:04AM | 0 recs
People who put profits ahead of the community's
health should be executed as traitors..

They are the real evildoers.. Mr. Bush's contributors.. the Enrons, the Uniteds the thieves among us..

They should be forced to listen as testimony is given by each and every one of the people whose lives they have ruined..

Even if it takes months or years for every one of them to be heard...

If they turn their heads to look away, they should be beaten until they are paying attention...

**Just kidding**

But this is a SERIOUS issue and not enough realize it. They think that THEY will not be effected.. that their lives will not be touched by the health effects of the industrially effluent..

They should think again, it effects all of us..

Businesses like to get fat government subsidies to shift this and that, to avoid DEALING WITH THEIR TOXIC GARBAGE..

But that is like shitting in your own house.. (or in others)

Either way, its not a good idea!

When will these children grow up and learn their potty training lessons?

by ultraworld 2005-06-25 08:13AM | 0 recs
Thanks for promoting this diary to the front page.  
by Bonddad 2005-06-25 09:44AM | 0 recs
U.S. Health Care vs. The World
Kevin Drum did a Health Care Roundup in April that linked to some hard facts provided by The Angry Bear, Health Care in The U.S. And The World, Part II: What do we spend the money on?.

Bradford Plummer on The Single-Payer That Dare Not Speak Its Name:

Plummer links to The Top Ten Reasons to Oppose Universal Health Care and Yale Professor Jacob Hacker's pretty good proposal for expanding Medicare to cover the uninsured. (pdf file)

The ideas are out there. Democrats don't seem any more interested in talking about them than Republicans. They're all afraid of being called communists by Limbaugh and Hannity.

by Gary Boatwright 2005-06-25 10:53AM | 0 recs
Health Crisis
Healthcare is certainly a problem for everyone in the US. One small comment on yor figures is that you use averages for determining the health costs of your two families, but then add in the full $1000 deductible, which is probably not average. My policies have more typically required $250 be paid out of pocket before the insurance kicks in and then a percentage paid (say 80%) until another threshhold is reached, after which insurance pays 100%. It does not in validate your point, but your figures are probably not correct based on averages.

We should also not forget what Health Insurance is doing to American business. It is killing whatever ability we have left to export American-made products. Healthcare payments cost General Motors something like $1100 per car. If it wants to export that car, the foreign buyer must subsidize our healthcare system $1100. All American products  carry our healthcare costs added to the production costs if the business is to make and profit and continue to survive. In most of the rest of the world, healthcare costs are paid by the government with tax dollars. In our global economy, we cannot compete if we expect foreign customers to pay for our healthcare as well as their own.

Whenever Democrats try to do something to improve the healthcare situation, we are faced with the GOP cries of tax, tax, tax; spend, spend, spend. I think the issue should be brought forward as how can we enable American companies to compete globally, not as how do we add more taxes on our average families to pay for better healthcare. Whatever we do will involve higher government expenditures, but the justification of making it easier for our industries to compete is likely to bring more moderates on board than a program that can be seen as primarily welfare for the poor or disadvantaged. It would also gain support of most all the businesses who export products abroad, icluding the makers of those high-priced CD's, DVD's, and software that are now so often pirated.

by Tietjens 2005-06-25 11:10AM | 0 recs
It's a competitive issue, too.
If Americans are going to continue to compete in the global marketplace, the healthcare crisis has to be resolved.  A great example of this was the recent announcement by GM that it would lay off 25,000 employees because of soaring healthcare oblications, which added some $1,600 to the price of every new vehicle sold.  The same issues are causing other company's to fold, scale down, or eliminate benefits.

Kevin Drum had a great series some weeks ago on affordable universal health care schemes that had real promise.  The sooner, the better for all Americans and hence, the country.

by donkef 2005-06-25 11:36AM | 0 recs
great stuff
wow, thanks for cobbling all this together bonddad.
by annatopia 2005-06-27 08:30AM | 0 recs
by kan105 2006-05-13 04:22AM | 0 recs
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by feigeone 2007-12-22 09:57PM | 0 recs


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