How much is too much to spend on health care?

Part of the national conversation on health reform must include a discussion of how much people should be expected to spend on medical care.

In this interview with National Public Radio health care economist Uwe Reinhardt suggests that the percentage of pre-tax income we can expect families to pay for care should be based on a sliding scale so that a waitress making less than minimum wage would not be expected to contribute more than 5 percent of her income while wealthier families could pay up to 10 percent of pre-tax income for health care.

Of course, paying 5 percent or 10 percent of pre-tax income for medical care would be a vast improvement over the current system.

According to a report released last month by Families USA nearly 18.7 million non-elderly Americans will spend more than 25 percent of their income on health care in 2009. About 64.4 million people will spend more than 10 percent of their family income on health care in 2009. And most of the people included in this study actually have health insurance.

It’s not enough to simply have health reform — any plan must also be affordable. That means that we need to analyze what “affordable” means. And Professor Reinhardt is correct, affordable for one family is prohibitive for another.

We can all agree that 25 percent of income, which is what many people are currently paying, is much too much for health care. I think a sliding scale with 10 percent as an upper limit sounds more reasonable.

4 Comments

  1. Dr. SinglePayer

    May 18, 2009 at 10:12 pm

    In the case of health care spending, less is more. Every other developed country in the world pays half or less for health care pre capita than we do in the US, and get 1. better health status and 2. higher quality health care. That is because those countries rely primarily on tax revenues and other public sources to pay for health care, not premiums paid to private insurance companies by employers and employees. The only way we will reach 5-10% of pre-tax income is through the tax system itself, which if progressive (as it once was) would recover relatively more from the well-to-do without depriving the less well off of access to quality health care.

  2. Alex

    May 19, 2009 at 10:40 am

    The system will have to collapse before reform truly comes. The lobby for Insurance and Pharmaceuticals is too strong. Both of them are having more and more consumers unable to afford their products. This is the key. Either they will lower their overhead and make more affordable products or they will go the way of other American companies who were greedy and refused to change.

  3. Puget Sound Woman

    May 21, 2009 at 2:34 pm

    Healthcare should be affordable, especially for SENIORS and VETERANS! Yes, the system may have to collapse, perhaps that could take place if we had term limits, but until then the lobby will keep on lobbying…Dr. Single would you please name countries and show the studies and stats that have better health care the the US. I am all for lower health care costs for most people, but not if the well to do is defined as someone making 250K-that is not rich and should not be considered rich. 250K equates to being successful. Two law school grads living together do not consider their combined incomes of 250K to be rich…

  4. Adam Linker

    May 21, 2009 at 2:49 pm

    Here is a chart of total health spending for developed nations: http://www.kff.org/insurance/snapshot/chcm010307oth.cfm

    Here is a World Health Organization report on world health systems: http://www.who.int/whr/2000/media_centre/press_release/en/

    Here is a Commonwealth Fund report examining the U.S. health care system: http://www.commonwealthfund.org/Content/Publications/Fund-Reports/2008/Jul/Why-Not-the-Best–Results-from-the-National-Scorecard-on-U-S–Health-System-Performance–2008.aspx

    Trying to figure out who is rich is a fruitless exercise, especially if you rely on whether or not people consider themselves rich. No one considers themselves rich. Almost everyone, even many millionaires, will claim to be middle class in surveys. But two people living together and making more than 250K per year in income are solidly in the top 5 percent of households.