Vivian Ho, who holds the Baker Institute Chair in Health Economics at Rice University’s Baker Institute for Public Policy and is also a professor of medicine at Baylor College of Medicine, had some things to say in an article for The Hill about a recent USA Today story concerning healthcare and the middle class.
The USA Today article Ho examined cited data from the Kaiser Family Foundation, which stated that the average deductible for individual coverage more than doubled in eight years, from $584 to $1,217. The story also made sure to point out that this change was due to: corporate greed, the Affordable Care Act, and corporate belt-tightening from the economic downturn and stagnant wages.
Ho begs to differ.
She starts by analyzing this idea of blaming corporate greed:
“The 2013/2014 Towers Watson/NBGH Employer Survey calculates that the average cost of healthcare per employee (including those with family coverage) among firms with at least 1,000 employees rose from $12,745 to $15,194 between 2011 and 2014. While the amount that the worker pays for these costs has risen $1,243 (from $4,381 to $5,624), the amount the employers pay per worker has also increased $1,196 (from $8,364 to $9,560). Perhaps one can accuse corporations of being a bit greedy, but they are still paying 63 percent of workers’ healthcare costs.
When it comes to Obamacare, Ho makes a point to highlight where the “Cadillac tax” comes into play:
“Most economists I know are in favor of the Cadillac tax. Current U.S. tax policy exempts health insurance benefits from income and Social Security taxes, which causes workers to choose higher levels of health insurance and lower levels of wages in their total compensation package than they would otherwise. This tax distortion leads Americans to purchase overgenerous health insurance policies, which has fueled the rise of healthcare costs over the past few decades. But the Cadillac tax only penalizes healthcare benefits exceeding relatively generous levels — and not for another three years. In fact, 85 percent of firms surveyed said they don’t expect their health plans would trigger the Cadillac tax in 2018. It’s hard to believe the Cadillac tax could be causing this large of a reaction by employers and so quickly.”
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
As far as how the economic status of the country and wages are concerned, Ho has this to say:
Certainly workers’ earnings have not kept pace with the rate of growth of healthcare expenditures in the economy. But stagnant wages have created challenges for workers to afford all sorts of products and services — not just healthcare. The middle class is struggling to pay for education, housing and transportation as well. Yet spending on healthcare has outpaced the general rate of inflation for decades. Perhaps the increase in spending on healthcare the U.S. has experienced has been worth it. We live in an era of remarkable advances in treating heart disease, cancer and other life-threatening diseases. Surely these treatments are worth paying for.
Obviously healthcare is consistently a hot issue, but especially right now with so much going on in the political ecosystem, a new Congress, and the 2016 presidential race basically right around the corner. Everyone is entitled to their own opinions, but when it comes down to it, let’s hope the big decisions are made more based on the influence of facts.
