Whither Thou Go'est Healthcare In America?

This article provides the latest data on healthcare spending in America.  It uses Millman data on employer funded heath insurance that is alarming.  The national average cost of healthcare spending rose 6.9%  for a family of four to $20,728.  The employer contribution was $12,144, the employee contribution was $5,144, and co-payments by families was $3,470.  Since the employer contribution to insurance premiums reduces cash compensation by a similar amount, economists believe that families absorb the full cost of the insurance premiums.  The major benefit they receive is that large employers are able to negotiate lower premiums from insurance providers.  The employer contribution to premiums is also excluded from taxable income.

The median household income in the US is illustrated by a graph in the article.  It is around $50,000.  The implication is that over 40% of household income for the median family is consumed by healthcare insurance.  Moreover, since price inflation is twice as fast as growth in income, the share of median family income consumed by healthcare spending will double in 20 years.  That is not sustainable, and there is little agreement among politicians on a solution.  If price inflation continues at its current rate, some form of rationing will be imposed.  One form of rationing, that is not referred to as rationing, is the pricing system itself.  As prices rise, healthcare spending will be rationed by income.  Families at the top of the income pyramid will be able to afford the best available healthcare.  Lower income families will only be able to afford less expensive forms of healthcare. This is the direction in which consumer directed healthcare, which is favored by the GOP, takes us. When  GOP politicians claim that America has the best healthcare in the world, this is what they mean.  Households with high income, or with good health insurance, have access to the best healthcare that money can buy.  The market determines the quality of healthcare available as a function of income, just like it determines the quality of automobiles available to households.