Health care taking a bigger chunk of families’ paychecks
Families in Massachusetts and across the country are spending more of their paychecks on health care as rising premiums and deductibles continue to outpace incomes, according to a study.
In an analysis to be released Wednesday, the Commonwealth Fund, a New York-based research foundation, said Massachusetts families spent 7.3 percent of their incomes on health insurance last year. That was up from 5.7 percent in 2010 and 5.2 percent a decade ago.
The rise in health insurance premiums moderated from 2010 to 2015, compared with the previous five years, the study said, but families and individuals didn’t feel that slowdown because their incomes couldn’t keep pace. The report looked at the majority of Americans under age 65, about 154 million people, who receive health insurance through employers.
“As far as families are concerned, they’re still facing a bigger burden today . . . because wages have remained largely flat in the last few years,” said David Radley, one of the report’s authors.
Despite efforts to contain spending, health care remains a significant issue nationwide. It vaulted into the presidential campaign this week after federal officials said premiums for mid-level health plans available under President Obama’s signature Affordable Care Act would jump an average of 25 percent next year. That immediately drew fire from Republicans who oppose the law, also known as Obamacare.
In Massachusetts, average premiums for individuals and small businesses buying insurance next year are set to rise a more modest 6.7 percent, though premiums for some plans will rise by double digits.
Massachusetts has among the highest health care costs in the country, but also among the highest incomes, a point that was highlighted in the new Commonwealth Fund data. Nationally, families spent 10.1 percent of their incomes on health insurance premiums and deductibles last year, compared with 7.3 percent in Massachusetts.
The median household income in Massachusetts was $73,015 last year, while the national median was $57,764, according to federal government data.
Last year, Dr. David Torchiana, chief executive of the state’s largest and most expensive health system, Partners HealthCare, held up Massachusetts’ high incomes as evidence that health care in the state is relatively “affordable.” Governor Charlie Baker also has noted the state’s high income levels when talking about health care costs.
But Stuart Altman, a longtime health policy expert at Brandeis University, said he doesn’t buy that argument.
“We can’t use that as an excuse to say [everything’s] fine,” said Altman, who chairs the state Health Policy Commission, which monitors medical costs. “It’s a partial explanation, but it’s not an excuse.”
Altman and Brian Rosman, policy director for the Boston-based consumer advocacy group Health Care For All, noted that while Massachusetts is a relatively wealthy state, many families with low and moderate incomes struggle with health care costs.
“The problem is maybe less urgent for those at the higher end of the income scale,” Rosman said. “That doesn’t mean we don’t have big affordability problems at the lower end.
The message of this [Commonwealth Fund] data is that health care costs are a problem everywhere and that we need to continue working on it in Massachusetts.”
Overall, medical spending rose 4.1 percent in Massachusetts last year, to almost $57.4 billion, according to state data.
Though costs tend to be higher in Massachusetts, researchers at the Commonwealth Fund noted that health insurance plans here are also more generous than in other states. For example, Massachusetts plans tend to have smaller deductibles than plans offered in Florida, they said.
“There is always a risk going forward that that could change,” said Sara Collins, another author of the Commonwealth Fund study. “What matters over time in Massachusetts is the trajectory of premiums — will it continue to climb a lot, and will employers try to cope with those rising premium costs by increasing the share that employees are required to contribute.”