Surging Health Care Costs Come Right Out of Your Pocket
The health care costs draining your personal budget come in two pieces: the amount you see directly as health care, and the hidden costs embedded in taxes, salary you don’t get, and the cost of virtually everything you buy. Health care costs gobble one out of every six dollars of the GDP (Gross Domestic Product), with that percentage rising every year. Even Warren Buffett, the wealthy business man, called health care costs a “tapeworm” dragging down the economy.
The direct costs are obvious. Milliman, a leading actuarial firm, reported that health care for a family of four in 2010 in the U.S. averaged a staggering $18,074. Of this, employers paid an average $10,744 while employees footed the remaining $4,375 toward insurance and $3,005 in out-of-pocket costs directly to medical providers. So if your family is typical, you paid $7,330 toward health care in 2010.
But wait. How about the $10,744 your employer spent? Theoretically at least, that’s another nice chunk of salary you could have been paid if your employer did not have to use it for health care. And it gets worse. Because every time you buy just about anything, part of the cost built in is to cover the cost of health care premiums that the organization providing the product or service had to spend for their employees. Then, of course, there are taxes for public health care programs.
In these budget-conscious times, who would not miss this huge an expenditure? The family and individual costs are mirrored on a national level in skyrocketing deficits due, in large part, to mounting health care costs.
The Congressional Budget Office (CBO) forcefully summarizes the dilemma in their January 2011 report. The CBO calls the fiscal outlook “daunting” and notes: “If revenues stay close to their average share of GDP for the past 40 years, that rise in spending will lead to rapidly growing budget deficits and surging federal debt. To prevent debt from becoming unsupportable, policymakers will have to substantially restrain the growth of spending, raise revenues significantly above their historical share of GDP, or pursue some combination of those two approaches.”
There is one strategy no one in power nationally has suggested.