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HOUSEHOLDS PAY
FOR HEALTH CARE IN THE FUTURE?
Pioneers Mission
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What Will U.S. Households Pay for Health Care in the Future?
TABLE OF CONTENTS
Executive Summary
Background
Methodology
Findings
Discussion
12
Conclusion
14
Appendix
17
17
19
Endnotes
20
What Will U.S. Households Pay for Health Care in the Future?
Executive Summary
Background
What Will U.S. Households Pay for Health Care in the Future?
fundamental issues with the efficacy and quality
of U.S. health care relative to the high spending in
this area.
Methodology
What Will U.S. Households Pay for Health Care in the Future?
recent year for which income data is available.
From 2009 through 2014, U.S. household
earnings grew by an average of just 1.53 percent
each year.
Findings
The Smiths
2025
2035
16.00%
27.36%
44.96%
16.00%
25.17%
39.36%
Year
2025
2035
$8,583
$18,251
$36,562
$8,583
$16,792
$32,006
$53,657
$66,716
$81,326
Year
The Johnsons
The Millers
2025
2035
16.00%
24.42%
35.88%
16.00%
22.24%
30.28%
Year
10
What Will U.S. Households Pay for Health Care in the Future?
2025
2035
$8,583
$16,293
$29,178
$8,583
$14,834
$24,622
$53,657
$66,716
$81,326
Year
2025
2035
16.00%
21.99%
29.65%
16.00%
19.81%
24.05%
Year
11
2025
2035
$8,583
$14,672
$24,115
$8,583
$13,213
$19,559
$53,657
$66,716
$81,326
Year
Discussion
12
What Will U.S. Households Pay for Health Care in the Future?
2023, for example.30 A June 2014 report from
PricewaterhouseCoopers (PwC) Health Research
Institute (HRI) projected health cost growth
as high as 6.8 percent through 2015.31 These
growth predictions all fall within the range of the
three separate scenarios we generated, running
projections for 4-8 percent. Nonetheless, these
three studies forecast dramatically different cost
scenarios.
13
Conclusion
Recommendations
14
What Will U.S. Households Pay for Health Care in the Future?
An Economic Policy Institute brief from May
2013 found that shifting costs to consumers
could expose them to a higher risk of financial
shocks and might lead to overall higher costs due
to reductions in the consumption of preventive
care and other forms of necessary medical
interventions. The study also concludes that most
cost shifting measures are poorly targeted in
that they neglect the true source of rising costs
and contain costs solely through reducing quantity
of health care consumed and not reducing the
actual price of services.37 If CDHPs continue to
be used as a leading option for cost containment
in health care, lawmakers must be mindful of
these concerns to ensure consumers do not face
overwhelming financial difficulty.
15
16
What Will U.S. Households Pay for Health Care in the Future?
Appendix
17
18
What Will U.S. Households Pay for Health Care in the Future?
About Pioneer
Recent Publications
19
Endnotes
1. Centers for Medicare & Medicaid Services. National Health Expenditure Projections 2014-2024. July 2014.
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/
NationalHealthExpendData/NationalHealthAccountsProjected.html
2. Congressional Budget Office. An Update to the Budget and Economic Outlook: 2015 to 2025. August 2015.
https://www.cbo.gov/publication/50724
3. The Federal Reserves inflation projections are based on percent changes from the fourth quarter of the previous year
to the fourth quarter of the year indicated and provide rates of change in the price index for personal consumption
expenditures.
4. The Federal Reserve. Economic Projections of Federal Reserve Board Members and Federal Reserve Bank Presidents.
March 2015. http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20150318.pdf
5. Emerman, E. U.S. Employers Changing Health Benefit Plans to Control Rising Costs, Comply with ACA, National
Business Group on Health Survey Finds. August 2015.
https://www.businessgrouphealth.org/pressroom/pressRelease.cfm?ID=234
6. Livingston, S. Health care premiums rise, more increases coming. August 2015. http://www.businessinsurance.com/
article/20150826/NEWS03/150829885/health-care-premiums-rise-more-increases-coming
7. Vitsnes, J, David, K, Miller, E. Statistical Brief #477: Results from the 2014 MEPS-IC Private-Sector National
Tables. Medical Expenditure Panel Survey. June 2015.
http://meps.ahrq.gov/mepsweb/data_files/publications/st477/stat477.pdf
8. Center for Health Information and Analysis. Findings from the 2014 Massachusetts Health Insurance Survey. May
2015. http://chiamass.gov/assets/docs/r/pubs/15/MHIS-Report.pdf.
9. This hourly rate assumes a 2080-hour work year.
10. Engdahl-Johnson, J, Mayne L. 2014 Milliman Medical Index. 2014.
http://www.milliman.com/uploadedFiles/insight/Periodicals/mmi/pdfs/2014-mmi.pdf
11. Cohen, RA, Kirzinger, WK. Financial Burden of Medical Care: A Family Perspective. January 2014.
http://www.cdc.gov/nchs/data/databriefs/db142.htm
12. Long, SK, Nordahl, K, Seifert, R. Coverage and Access Remain Strong, But Costs are Still a Concern: Summary of
the 2012 Massachusetts Health Reform Survey. March 2014.
http://www.bluecrossmafoundation.org/sites/default/files/download/publication/MHRS_Summary.pdf
13. Lischko, A. Consumer Driven Health Care: A New Agenda for Cost Control in Massachusetts. December, 2012.
http://pioneerinstitute.org/featured/consumer-driven-health-care-a-proven-strategy-for-managing-health-care-costgrowth/.
14. Aon Hewitt. Aon Hewitt Analysis Shows Upward Trend in U.S. Health Care Cost Increases. November, 2014.
http://ir.aon.com/about-aon/investor-relations/investor-news/news-release-details/2014/Aon-Hewitt-AnalysisShows-Upward-Trend-in-US-Health-Care-Cost-Increases/default.aspx.
15. The Kaiser Family Foundation and Health Research & Educational Trust. Employer Health Benefits: 2014 Annual
Survey. https://kaiserfamilyfoundation.files.wordpress.com/2014/09/8625-employer-health-benefits-2014-annualsurvey6.pdf
16. The Kaiser Family Foundation and Health Research & Educational Trust. Kaiser/HRET Survey of EmployerSponsored Health Benefits, 2006-2014: Summary of Findings.
http://kff.org/report-section/ehbs-2014-summary-of-findings/.
17. Towers Watson and the National Business Group on Health. The New Health Care Imperative: Driving
Performance, Connecting to Value. 19th National Business Group on Health Employer Survey on Purchasing
Value in Health Care, May 2014. http://www.towerswatson.com/en-US/Insights/IC-Types/Survey-ResearchResults/2014/05/full-report-towers-watson-nbgh-2013-2014-employer-survey-on-purchasing-value-in-health-care
20
What Will U.S. Households Pay for Health Care in the Future?
18. Davis, K, Stremikis, K, Squires, D, Schoen, C. Mirror, Mirror on the Wall, 2014 Update: How the U.S. Health Care
System Compares Internationally. June 2014.
http://www.commonwealthfund.org/publications/fund-reports/2014/jun/mirror-mirror.
19. Schoen, C, Lippa, J, Collins, S, Radley, S. State Trends in Premiums and Deductibles, 2003-2011: Eroding
Protection and Rising Costs Underscore Need for Action. December 2012.
http://www.commonwealthfund.org/~/media/Files/News/News%20Releases/2012/Dec/1648_Schoen_state_
trends_premiums_deductibles_2003_2011_1210_EMBARGO.pdf.
20. The Executive Office of the President. The Burden of Health Insurance Premium Increases on American Families.
September, 2009. https://www.whitehouse.gov/assets/documents/Health_Insurance_Premium_Report.pdf.
21. The Kaiser Family Foundation and Health Research & Educational Trust. 2013 Employer Health Benefits Survey.
August, 2013. http://kff.org/report-section/ehbs-2013-section-1/.
22. U.S. Census Bureau. Median Household Income by State: 1984 to 2013. Table H-8.
http://www.census.gov/hhes/www/income/data/historical/household/
23. Young, R, DeVoe, J. Who Will Have Health Insurance in the Future? An Updated Projection. March/April, 2012.
http://www.annfammed.org/content/10/2/156.full.pdf+html.
24. Though the focus of this paper is employee contributions + OOP costs, Young & DeVoe offer numerous findings
based on analysis of total family premiums vs. future household income. According to their updated study, a family
health insurance premium would be equivalent to the average U.S. households yearly earnings by 2033 at annual
increases of 8 percent, with a delay of only 4 years assuming moderate impact by the ACA (7 percent growth per year)
in slowing insurance premium inflation.
25. Engdahl-Johnson J. Mayne L. 2015 Milliman Medical Index. 2015.
http://www.milliman.com/uploadedFiles/insight/Periodicals/mmi/2015-MMI.pdf
26. The Affordable Care Act does establish an out-of-pocket maximum per policy period, including deductibles,
coinsurnace, and copayments. The OOP limit for any individual Marketplace plan for 2015 is $13,200 for a family
plana figure our projections do not surpass until 2035, at which point it can be reasonably assume this limited will
be adjusted for inflation.
27. The Census Bureau defines this income as earnings received on a regular basis (exclusive of certain money receipts
such as capital gains) before payments for personal income taxes, social security, union dues, Medicare deductions,
etc.
28. Our projections for employee premium contributions are based on 2014 data from the national-level Insurance
Component of MEPS. As the MEPS website describes, this component fields questionnaires to private and public
sector employers to collect data on the number and types of private health insurance plans offered, benefits associated
with these plans, annual premiums, annual contributions by employers and employees, eligibility requirements, and
employer characteristics.
29. Towers Watson and the National Business Group on Health. The New Health Care Imperative: Driving
Performance, Connecting to Value. 19th National Business Group on Health Employer Survey on Purchasing
Value in Health Care, May 2014. http://www.towerswatson.com/en-US/Insights/IC-Types/Survey-ResearchResults/2014/05/full-report-towers-watson-nbgh-2013-2014-employer-survey-on-purchasing-value-in-health-care.
30. Hartman, M, Martin, A, Lassman, D, Catlin, A, the National Health Expenditure Accounts Team. National Health
Spending in 2013: Growth Slows, Remains in Step With Overall Economy. Health Affairs, January 2015.
http://content.healthaffairs.org/content/34/1/150.full.
31. PricewaterhouseCoopers Health Research Institute. Medical Cost Trend: Behind the Numbers, 2015. June 2014.
http://pwchealth.com/cgi-local/hregister.cgi/reg/pwc-hri-medical-cost-trend-2015.pdf.
32. Schoen, C, Lippa, J, Collins, S, Radley, S. State Trends in Premiums and Deductibles, 2003-2011: Eroding
Protection and Rising Costs Underscore Need for Action. December 2012.
http://www.commonwealthfund.org/~/media/Files/News/News%20Releases/2012/Dec/1648_Schoen_state_
trends_premiums_deductibles_2003_2011_1210_EMBARGO.pdf.
21
33. Massachusetts Health Policy Commission. 2013 Cost Trends Report. January 2015.
http://www.mass.gov/anf/docs/hpc/2013-cost-trends-report-final.pdf.
34. Haviland, A, McDevitt, R, Marguis, M.S., Sood, N, Buntin, M. Skin in the Game: How Consumer-Directed Plans
Affect the Cost and Use of Health Care. Santa Monica, CA: RAND Corporation, 2012.
http://www.rand.org/pubs/research_briefs/RB9672.
35. PricewaterhouseCoopers Health Research Institute. Medical Cost Trend: Behind the Numbers, 2015. June 2014.
http://pwchealth.com/cgi-local/hregister.cgi/reg/pwc-hri-medical-cost-trend-2015.pdf.
36. Haviland, A, McDevitt, R, Marguis, M.S., Sood, N, Buntin, M. Skin in the Game: How Consumer-Directed Plans
Affect the Cost and Use of Health Care. Santa Monica, CA: RAND Corporation, 2012.
http://www.rand.org/pubs/research_briefs/RB9672.
37. Gould, E. Increased Health Care Cost Sharing Works As Intended: It burdens patients who need care the most.
Economic Policy Institute, May 2013.
http://www.epi.org/publication/bp358-increased-health-care-cost-sharing-works/.
38. Blue Cross Blue Shield Association and Blue Health Intelligence. A Study of Cost Variations for Knee and Hip
Replacement Surgeries in the U.S. January 2015.
http://www.bcbs.com/healthofamerica/BCBS_BHI_Report-Jan-_21_Final.pdf.
39. Anthony, B, Haller, S. Mass Hospitals Weak on Price Transparency. June 2015.
http://pioneerinstitute.org/healthcare/survey-price-information-difficult-to-obtain-from-massachusetts-hospitals/.
40. For more recommendations to improve health systems flexibility and generate more options for consumers, see
Pioneers Bakers Dozen report:
http://pioneerinstitute.org/news/bakers-dozen-a-common-sense-healthcare-agenda-for-the-next-governor/
41. These projections for civilian households are based on 2013 data for premium contributions to family plans, the
most recent year for which data is available through MEPS. The most recent data for private sector households is
from 2014.
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What Will U.S. Households Pay for Health Care in the Future?
23
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