Family Income Gains All Going to Health Care

Over a decade, the median-income family of four with health insurance from their employer saw their real annual earnings rise from $76,000 in 1999 to $99,000. But nearly all that gain was eaten up by rising health care costs, a new study finds.

After taking into account the price increases for other goods and services, the typical family had just $95 a month more in 2009 than in 1999 to devote to non-health spending…

RAND study here.

Comments (6)

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  1. Devon Herrick says:

    Economists have long maintained the (significant) amount employers pay towards their workers’ health plan is actually compensation. If they understood that employer contributions reduce take-home pay, workers would demand control of the funds. Workers would not tolerate $12,000 to $15,000 of their annual compensation wasted the way it currently is. As evidence, look at the individual and self-employed market where HSAs have taken off.

  2. Jeff says:

    This is what it means for health spending to rise at a rate that is twice as fast as income is growing. Inevitably, health care begins to crowd out everything else.

  3. Tom H. says:

    These results are sobering.

  4. Virginia says:

    This on the heels of another report that wages are falling. I think we’re beginning to see a major shift in the American lifestyle.

  5. Linda Gorman says:

    The abstract says real annual earnings, not compensation. So, the question is whether this is measuring total compensation or just money income without benefits. If it is the latter, then the conclusion that all gains are being eaten up by health care costs (and is it cost or expenditure?) is not correct.

  6. Don Levit says:

    The median household income is less than $50,000, about what it was in inflation adjusted dollars in the mid 90s.
    Apparently, this is a special subset of households, only those who have health insurance.
    While dramatically showing the increase in premiums, it is highly inaccurate as to what the typical household is facing.
    Don Levit