Earnings vs. Health Insurance Costs
The U.S. median wage for 2010 was $26,363.
The average health care insurance premium today is over $15,000 and by 2021 it may be headed to $32,000 or so (admittedly that estimate is based on extrapolation).
Therein lies the problem.
To oversimplify a bit, treat the wage as the economic value produced by the median individual. This will be most on target for individuals who do not receive health care benefits through their current jobs…
In any case, we will have increasing numbers of individuals for whom the economic value needed to maintain them exceeds the economic value they produce. I don’t mean elderly people on life support, I mean able-bodied, working-age individuals. This will make it increasingly hard to implement “health care egalitarianism.”
More from Tyler Cowen at Marginal Revolution.
Or, more economically, health insurance is pricing a lot of people out of the market.
Proponents of the Affordable Care Act (ACA) championed the law because they believe it is needed to make health coverage affordable for many people. The only mechanism to make coverage affordable is the taxpayer subsidies for plans sold in the Health Insurance Exchange. However, I think it was economist, Thomas Sowell, who remarked that if something is not affordable individually; it cannot be affordable collectively.
Well, the problem of rising costs is real enough without mish-mashing the numbers. Note that he is talking about MEDIAN wages but AVERAGE premiums, and about INDIVIDUAL wages but FAMILY insurance coverage.