The cost of ordinary care

There’s a Russian proverb: It’s not the sea that drowns you; it’s the puddle.

The American concept of health insurance is shaped by the belief that people need the greatest protection from catastrophic, costly illnesses and conditions. Everything else – in other words, most routine care – is affordable and should be borne by the consumer.

At one time this might have been the case. But I’m not sure how well it continues to hold true. This study, which was published a couple of months ago in the Health Affairs journal, explains some of the cost trends that have been taking place. (Access to the article is by subscription only; a summary of the key points can be found here.)

Broadly speaking, almost 20 percent of working-age Americans now spend 10 percent or more of their pre-tax income on health insurance premiums and medical care. From 2001 to 2006, the number of people in this bracket grew by about 1 percentage point each year. If you estimate that the median household income in rural west-central Minnesota is around $40,000, on average that’s $4,000 worth of annual medical expenses and insurance premiums – and that’s before taxes are figured into the equation. Some individual families obviously are paying considerably less than this if they’re healthy (and lucky enough not to get hit with an expensive illness or injury); others are paying way more.

The study points out that the burden of out-of-pocket health care costs has been growing especially rapidly among middle- and upper-middle-class households with private insurance.

Data were collected from a sampling of 28,000 people under age 65 for each of the years included in the study. Since the survey was conducted before the recession, it’s probably safe to assume there was little change in 2007-2009 in the cost burden being shouldered by many of these households.

There seems to be multiple contributing factors to this trend, starting with household income, especially in the bottom half of the median. Have wages kept up with the cost of living and what it takes to feed, clothe and house a family? Probably not. The other issue, though, is that health insurance premiums and the cost of medical care have been rising faster than the rate of inflation. Put them together and what you have is a widening gap. Efforts to plug the gap have consisted mainly of increasing what people are being asked to pay out of pocket. It’s not at all clear whether this strategy can be sustainable over the long term.

There’s also something else going on: the growing prevalence of pre-existing conditions. Families USA, a national consumer advocacy group for affordable health care, is releasing a report tomorrow that attempts to quantify how many Americans have an identifiable health condition that might previously have precluded them from being able to obtain health insurance. Among the preliminary findings: 57.2 million working-age Americans have some kind of pre-existing condition that potentially affects their ability to be insured.

This is not a direct proxy, of course, for health care costs, nor is it a measure of health care affordability. The point is, millions of Americans have some kind of serious and/or ongoing health issue either in their past or that they’re dealing with currently, and it comes with a cost – not just to the overall system but to these people’s individual finances as well.

This isn’t an argument in favor of scrapping the entire structure and philosophy underpinning the U.S. health insurance system. Most of us, unless we’re millionaires, cannot afford the cost of something catastrophic. Coverage for the major medical bills is, after all, why most people need health insurance. Many Americans cling to the belief, however, that all the rest of it, the so-called routine stuff, is somehow more affordable – even though the evidence is mounting that for a sizeable portion of the population, the cost of routine, ordinary care is no longer routine or ordinary.

Should health insurance do better at covering basic services for which people are most likely to require medical care? Perhaps, although this comes with a hefty price tag of its own. Do we need to rethink the concept of deductibles and copayments and how they’re applied? Would some system of capitation help even out expenses so they’re more manageable for a broader swath of consumers? Or should we concentrate instead on curbing health care inflation or paying livable wages so the cost of ordinary care doesn’t get pushed out of reach?

The day-to-day costs of routine care might not seem like a big deal but they have an insidious way of adding up. In the public discussion about health care costs, we can’t afford to continue ignoring this fact.

Photo: Wikimedia Commons

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