No End To Rising Health Care Costs

 Everyone knows the cost of health care is rising every year with no end in sight. Many families are burdened with premiums that are eating up a large portion of their budget. Those with health insurance plans through work are seeing them out of pocket costs grow. Some employees are even paying more for benefits at work than they would on their own.

A RAND Corp study, released in September of 2011, examined the health care and the average American family's budget from 1999 to 2009. While the average family saw a 30% increase in their income, much of that was wiped out by greater gains in the cost of medical care. Inflation and higher taxes further decimated the gains.

They found that monthly premiums for health insurance grew by 128% over the decade studied. This is well beyond the rate of inflation. Prices on all goods tend to go up over time due to the devaluation of currency called inflation. But when the price for a good goes up faster than inflation, it becomes relatively more expensive than other goods in the economy. This is precisely what is happening with health care. When people are forced to spend relatively more on a good, they feel they are taking a step backward in terms of their living standard.

Making matters worse, many people who receive their health benefits through their employers are seeing lower wage gains. An employer has to take the total cost of an employee into account, and that includes what the employer spends on health benefits. When health care costs increase for the employer, they have actually increased the amount they spend per employee, only it doesn't feel that way to the worker. The worker is indeed getting a raise, it is just going directly to their health care costs. As healthcare costs for employers continue to rise, it will put downward pressure on wages.

Healthcare costs are going up for a variety of reasons. First and foremost, patients now have access to cutting-edge - and expensive - medical procedures that were not available before. While these procedures extend people's lives and well-being, they are very expensive and have to be paid for. Additionally, with few patients paying the direct cost of medical care, rather than paying their insurance company, the market for medical care becomes distorted.