Study: Health Insurance Premiums Will Equal 50% of Household Income by 2021

According to a new study, if current trends continue, the cost of health insurance for a typical American household will devour all of its paycheck(s) by 2033.

Doctors Richard A. Young and Jennifer E. DeVoe, whose study was featured in ‘Annals of Family Medicine’, reached this conclusion by comparing recent increases in health insurance costs with the considerably lower increases in family income:

“From 2000 to 2009, the average annual increase in insurance premiums was 8.0%; household incomes rose an average of 2.1%.

If health insurance premiums and national wages continue to grow at recent rates and the US health system makes no major structural changes, the average cost of a family health insurance premium will equal 50% of the household income by the year 2021, and surpass the average household income by the year 2033.”

Even worse:

“If out-of-pocket costs are added to the premium costs, the 50% threshold is crossed by 2018 and exceeds household income by 2030.”

The Affordable Care Act, also known as “Obamacare”, has been repeatedly touted by the president as a means to make healthcare affordable, hence the name. But even if Obamacare delivers on those promised savings we don’t have much relief to look forward to.

Young and DeVoe calculate that under the president’s healthcare law the cost of health insurance will top median family incomes in 2037 instead of 2033.

There are others who are more optimistic.

Noelia de la Cruz, writing for Business Insider, notes that a recent study published in Health Affairs suggests that the Affordable Care Act could bring about bigger cost savings than most experts, including Young and DeVoe, are anticipating:

“Researchers equipped 26,000 previously uninsured Richmond, Va. residents with health care plans and tracked them between 2006 and 2007.

In the end, they found the participants cut health care costs by 50 percent with fewer emergency room visits and more access to preventative health care.”

In the Washington Post’s Wonkblog, Sarah Kliff offers another possible reason for optimism:

“Young and DeVoe’s projections do not take into account the most recent year of health spending data, which showed health-care costs growing at the same pace as the rest of the economy, not faster. There’s a lot of debate over whether that slowdown is the start of a long-term trend, or a short-term side effect of the recession.”

Followed by a cold dose of reality:

“But even if overall health-care costs are growing slower, that doesn’t necessarily translate to lower insurance premiums: In recent years, employers have shifted an increasing chunk of health insurance bills to their employees.”

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