Protecting Family Budgets

Americans are spending $4 trillion per year—about $12,000 per American—on health care. This is more than twice per capita what most other developed countries spend.

According to Kaiser Family Foundation, a family of four with a $50,000 income and employer coverage spends $7,450 per year on health—15% of their income.

A family of four with a $100,000 income and individual market/exchange coverage spends $24,300 per year on health—24% of their income.

Spending graph

In fact, according to an analysis by the White House Council of Economic Advisers, if we really want to increase wages sustainably, it’s essential to keep down health care cost inflation. Health care costs are simply too big a part of human resources costs to absorb in employer profits.  So they will continue to be passed on to employees to a large extent—often totally undermining salary increases.

Projected annual compensation graph

Analyzed from any of these perspectives:
Middle-income families are paying 10-20% or more of their income for their (AND others’) health costs, when taxes are taken into account.

Do the math: For average families, tax cuts can literally no longer even come close to keeping up with health cost increases.

One major implication, especially for red-states and conservatives:
In order to afford significant future tax cuts, we need to reduce health care cost increases—and to reduce health cost increases, we need to prevent chronic diseases much more effectively.

Yet in red-states, political leaders continue to focus state policies on tax cuts—even though health care is a far bigger problem for families.

Meanwhile, in blue-states, the focus in health continues to be on accessibility to and affordability of health care—by which progressives mean expanding public subsidies for the treatment of increasingly common chronic conditions. Clearly, though, given already high health costs AND the high blue-state tax burden on families—including the state’s portion of Medicaid and other health-related taxes—simply pumping more public money into health care is not sustainable.

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