The Forgotten Middle Class in Health Care

Of the three economic classes in America, the middle class is having the most difficult time paying for health care.  While the wealthy possess the resources to obtain medical care independently, and the poor are qualifying for government assistance through programs like Medicaid and Obamacare, the financial burden has grown for those American households caught in between.  The Brookings Institute found that middle income families now spend 8.9 percent of their annual income on health care, up from 5.9 percent in 1984.  Much of this is related to employer health plans that are shunting a greater financial responsibility onto workers. On average, working Americans pay about $440 a month for full family coverage, while their employer pays about $1,075 per month. Since 2010, the average deductible has risen 67 percent, or almost seven times that of inflation. This has also been exacerbated by rampant growth in prescription drug costs, which have almost doubled since 2011. For the almost 55 percent of Americans, or 150 million, who obtain health coverage through their employer, this is forcing them to stretch their shrinking budget even further. The sluggish economic growth of the past few years has also slowed middle class purchasing. Between 2010 and 2015, wages for American workers have grown at a consistently low rate of 2 percent annually.  Ironically, even the Obama administration ignored the silent majority.  For many middle income Americans making more than $47,520 or households with income of more than $97,200, health plans through government-subsidized health insurance exchanges were not available.  New expansions to state Medicaid programs also aided the poor—who are often the most ill—but shut out middle class families. It was reported in 2015, that almost 46 percent of Obamacare applicants chose not to get insurance through the exchanges because it was too expensive, presumably because they didn’t qualify for tax credits. The issue of cost is more problematic in 2017, when insurance premiums for the government-subsidized plans are expected to jump sharply. The Department of Health and Human Services reports that the average premium for an Obamacare policy rose 25 percent in 2017.  Although the HHS agency attributes the rise to adjustments in cost data for the past two years, there are other factors like major insurers leaving the marketplaces. More families are expected to forgo health coverage for the year and pay the penalty of $695 per person or 2.5 percent of annual income, whichever is greater. In 2016, almost 6.5 million Americans paid an average penalty of almost $470. The growing burden of health care costs may weigh most heavily on the middle class, but the nation as a whole is facing an inexorable rise in medical costs. Last year, health care spending as a share of national GDP hit 18.2 percent in June and February, marking a new all-time high.  While economists stress that health care expenditure growth has slowed in the past few years, the more modest growth curve remains unsustainable in the long term.

Article written by:  Robert Moghim, M.D., CEO- Moghim Medical Consulting, Inc.

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