For lower-middle class workers the outlook is grim.
The amount that Americans spend on health care per person is currently about $7,500 per year, or 16.2 percent of GDP. In 10 years, it will be roughly $13,600, or 20 percent of GDP. Part of that increase will undoubtedly be due to better medical technology that (theoretically at least) leads to better care. But will you be better off?
If you earn a good salary and have employer-paid health insurance, then yes. You'll have access to many new therapies only dreamt about in 2007, and your out-of-pocket costs, while higher, will still be tolerable as a percentage of your disposable income.
Your employer will reduce your take-home pay by roughly the amount it's paying for your insurance premiums, and you'll have to pay higher taxes for Medicaid and Medicare. Most Americans will be blissfully ignorant of these indirect costs.
If you're lower-middle class, however, the future looks dire. That's because health insurance ostensibly paid by employers must be borne by the employees' gross wage base.
In the jargon of economics (hang in with me here), an employee's gross wage base is the price of labor in the marketplace, or the sum of all debits the employer makes to the payroll expense account.
For lower-income people, the gross wage base per worker is expected to rise only about 3 percent a year over the long term. At the same time, private health insurance premiums will rise somewhere from 5 percent to more than 15 percent per year.
That means for more and more moderately paid workers, the gross wage base will become too small a donkey to carry the rapidly growing burden of employer-paid health insurance and out-of-pocket spending. Millions of families headed by these people - hard-working waiters, taxi drivers, sales clerks - will join the ranks of the uninsured. They are sailing into a perfect storm.
I see two options to address this problem. Americans in the upper third of the nation's income distribution could subsidize (via added taxes) the health care of everyone else. Or the U.S. could restructure the health-care system so that it rations health care by income class. Which will you vote for?
