Why health care eats more of your paycheck every year

Associated Press

Millions of Americans are finding out this month the price of health insurance is going up next year – as it did this year, last year and most of the years before that.

And it’s not just that the price is going up, it’s that it goes up faster than wages and inflation, eating away at our ability to pay for other things we want (beer, televisions, vacations) or need (rent, heat, food).

“At some point it’s not going to be worth it to have less food, less travel in order to spend money on health care,” said Louise Sheiner, a health economist at the Brookings Institution.

Insurance premiums, which reflect spending on medicines, doctor visits, tests and hospital stays, have climbed 213 percent since 1999 for family coverage purchased through an employer, according to the Kaiser Family Foundation.

IT’S HARD TO SHOP FOR it

Insurers and employers have been trying for years to make patients better health- care shoppers and force doctors and hospitals to compete on price. They’ve raised deductibles or out-of-pocket costs on coverage and given tools to patients so they can compare prices and quality.

This can work ... for small stuff, said Renya Spak of the benefits consultant Mercer. Patients will shop if they need an MRI exam on their shoulder.

But Spak isn’t convinced it will do much for things like surgeries, when the insurer or employer will wind up covering much of the bill anyway and the best deal might involve travel away from family.

TECHNOLOGY DOESN’T HELP

Treatment advances in health care are geared more toward making something more effective, not cheaper, noted Paul Fronstin, an economist with the Employee Benefit Research Institute.

Device and drug makers have been producing a steady stream of new products for consumers, and insurers that pay the bills have a limited ability to keep prices for those devices and drugs down.

WHEN DOES THIS END?

Health-care spending now accounts for more than 17 percent of the U.S. economy. In 1980 it was half that.

Economists and benefits experts say this trend has to slow at some point, or consumers won’t have enough money left to spend on things unrelated to health care. Some think big, disruptive changes in how we buy care may be needed.