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Ezra Klein: You Have No Idea What Health Costs If You Did, You Might Just Want Real Reform

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The average premium for family health coverage through an employer was $13,375 in 2009, of which covered workers paid an average of $3,515. Since 1999, family premiums for employer-sponsored insurance have increased 131 percent, while wages have gone up 38 percent and inflation has gone up 28 percent
Kaiser Family Foundation

Comparison of health care vs Inflation and incomes from 1999 to 2009

Comparison of health care vs Inflation and incomes from 1999 to 2009

Using the Kaiser Family Foundation’s 2009 Employer Benefits Survey, Ezra Klein of the Washington Post writes today of the huge costs associated with health care today, particularly for employers.

For many, it’s among the largest investments we’ll make, on par, even, with the money we spend on a house or tuck away for retirement. But while it’s easy to track our stock portfolios as they tank along with the market, our outlay for health care is less obvious. Employers pay some, and so do individuals, and taxpayers. And some even hides behind the deficit. As such, few of us see the full picture. But to make sense of the proposals for reform, getting a grasp of the cost is critical.

The average health-care coverage for the average family now costs $13,375, according to Kaiser. Over the past decade, premiums have increased by 138 percent. And if the trend continues, by 2019 the average family plan will cost $30,083.

Three years of slightly above-average health insurance will cost a solid six figures.

Those are numbers to marvel at. Those are numbers to fear. But they are not the numbers that loom in the minds of most Americans. And therein lies the problem for health-care reform.

About 160 million Americans receive health coverage through their employers. In general, the employer picks up 73 percent of the tab. This seems like a good deal. In reality, that money comes out of wages.

These facts show that for a company with 100 employees, the company pays a health premium of $986,000 annually…with costs expected to rise. Is it any wonder that the numbers of companies offering insurance has gone down from 69% in 2000 to 63% in 2008. That 6% few employers offering these benefits.

As I’ve been writing for a long time, if the cost of health insurance and health care in general are not reduced, company offered health insurance prevent companies from being competitive in the global market place. To put this in perspective, if China sells a t-shirt in the U.S for $10, a U.S. company, with just 100 employees, might well have to sell that same t-shirt for $11 to $12 just to cover the cost of health insurance. That’s an anti-competitive barrier to U.S. companies doing business in the U.S.

The U.S. devotes considerably more of its economy to
health care than other developed countries. (Note that the
Organization of for Economic Co-Operation and
Development (OECD) uses a somewhat different
classification for health care spending than CMS.)
U.S. health spending as a share of GDP in 2006
(15.3% in OECD accounting) was considerably
higher than all other OECD countries, including
Canada (10.0%), France (11.0%), Germany (10.6%),
Japan (8.1%), and the United Kingdom
(8.4%). Switzerland was a distant second to the
U.S., devoting an estimated 11.3% of GDP to
health care.

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Written by Valerie Curl

September 21, 2009 at 3:40 PM

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