For these rising costs, the middle class has it the worst

The economics of the health care system can be bewildering, but here’s a truth that middle-class Americans may see all too clearly: they are bearing the brunt of higher medical costs.

Since 1984, the middle class has seen its out-of-pocket expenses for health care jump by 60 percent, far outpacing the 28 percent rise in medical costs for poor households, according to a recent analysis of household spending by The Hamilton Project. While the report didn’t break out spending for the upper income brackets, these households tend to be covered by employer-sponsored health care plans and have the financial wherewithal to pay for higher out-of-pocket expenses.

Middle-class families have been especially hurt since the recession, with their spending on health care jumping 25 percent from 2007 to 2014, according to The Wall Street Journal, citing an analysis from Brookings Institution senior fellow Diane Schanzenbach. At the same time, income for middle-class Americans has slipped, falling from almost $77,000 in 2000 to slightly more than $73,000 in 2014. The result: financial heartburn that no medication is likely to cure.

Instead, families are cutting back on other basics, spending less on clothing and eating out. In some cases, lower spending is the result of a decrease in underlying prices, such as with gasoline and some grocery items. Nevertheless, the trend may explain why, despite a growing economy, some sectors are experiencing challenges from uneven consumer spending trends

That’s not to say that low-income Americans have it easy. While the Medicaid expansion under the Affordable Care Act helped more lower-income households gain health coverage, millions continue to lack any insurance. For the poor, housing is creating the biggest pinch on their budgets, the Hamilton Institute report noted. Low-income families are now spending about 41 percent of their income on housing, compared with about one-third for middle-class families.

When it comes to health care, middle-income Americans are getting hit on a number of fronts. Deductibles, or the amount individuals pay out of pocket before their insurance coverage kicks in, has jumped by two-thirds​ for employer-sponsored health-care plans since 2010, according to the Henry J. Kaiser Family Foundation. 

Medications are also becoming more expensive, as exemplified this month with the furor over the 480 percent jump in the price of an EpiPen, which delivers a medication needed to save someone from a deadly allergy. 

While the EpiPen price hike is an outlier, medications across the board are on the rise, with a recent Harvard study​ finding that net spending on prescription drug prices rose about 20 percent from 2013 to 2015. On a per capita basis, Americans spend about $858 each on prescription drugs, or more than double the average for 19 other industrialized countries.

Health care spending as a share of GDP reached 18.2 percent in June, or a tie with the previous all-time high in February 2016, according to an August report from the Altarum Institute. The report concluded, “We stress that health spending growth has been moderate, especially when compared to pre-Great Recession rates, but we do not believe it is sustainable.”