Hidden factors boost annual cost to $8,000 for average household

THE average expenditure per household on health care is now running at $8,000 a year.Most families probably have little idea they are spending that much, notes C. Eugene Steuerle, a senior fellow at the Urban Institute in Washington. That's because most of the costs are hidden, including a portion of the $2,300 spent, on average, directly by members of the household. Besides out-of-pocket payments to health-care providers averaging $1,580 per household, some $590 is deducted from paychecks as the employee contribution to an employer-provided group health insurance plan and $130 from social security checks as the employee-paid premium for federal supplemental medical insurance. Then $3,930 per household is paid through higher rates of federal income, social security, state income, state sales, and other taxes to support federal, state, and local health efforts. Also, employers on average contribute another $1,580 per household towards health insurance or other health benefits. Economic theory holds that such payments by an employer actually come out of the employee's pockets in the form of reduced cash wages. Federal, state, and local governments will pay $390 billion this fiscal year to subsidize health care, or more than half the total $768 billion estimated by Mr. Steuerle. That sum is larger than the usual figure offered because it includes the value of tax subsidies that operate like other government expenditures. That government contribution to health care is almost $100 billion more than national defense expenditures and some tens of billions more than all government spending on education in the nation's elementary, secondary, and college-level schools. It is relatively more than many governments in other industrial nations pay for national health insurance programs that cover the entire population.

of 5 stories this month > Get unlimited stories
You've read 5 of 5 free stories

Only $1 for your first month.

Get unlimited Monitor journalism.