How health costs wiped out a full decade of income increases

at 09:00 AM ET, 09/08/2011

All evidence points to American voters not really caring about rising health-care costs. But here's one pretty compelling reason they should: The escalating cost of health care has wiped out nearly all income gains made by the average American family in the past decade.

A new study in the journal Health Affairs games out how steep health cost growths have decimated a full decade of increased earnings. It focuses on a middle-income family of four with employer-sponsored health insurance.

Overall, that middle-income family saw its income go up by $23,000, from $76,000 in 1999 to $99,000 in 2009 — not too bad. But rising health-care costs, in the form of increased insurance premiums and co-pays, ate up nearly all of that. Factor in that spending, and the average family only had $95 per month more in available income than it did a decade ago.

This picture could look a lot different. If health costs grew just 1 percent faster than inflation, for example, the same family would have $335 more in available earnings each month. Get health costs to keep pace with inflation and you're looking at a $545 bump in monthly income:

Keep in mind, too, that this study only looks at families with employer-sponsored insurance. The cost of health care for those without coverage is likely much higher.

 
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