The New York Times [registration] reports that annual health insurance costs -- which averaged $12,106 per family -- grew faster than average incomes in 2006.
Conveniently, government inflation statistics do not capture the rapid growth in health care costs, nor the other big costs affecting a middle class household such as energy (oil hit a record $78 per barrel yesterday), food (wheat prices are at a record high of $9 a bushel), education (college tuition rose an average 5.8% between 2001 and 2006), and housing (despite recent declines, housing prices have boomed in this decade). But the Consumer Price Index (CPI) -- +2.4% in July compared to the previous year -- has been carefully crafted to put a lid on growth in Social Security and other government programs whose payments are tied to the CPI.
So in 2006, health insurance costs grew an average of 7.7% while the CPI rose roughly 3%. Meanwhile, median family income declined 2% adjusted for inflation between 2000 and 2006. And in 2008 health insurance costs are expected to rise between 6.7% and 11% depending on which analyst is doing the forecasting.
How do your health insurance costs compare to the average? Are you scrimping on vacations or other budget items to pay those health insurance costs? Is your health insurance coverage worth the money you pay?
Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter.











Reader Comments (Page 1 of 1)
9-12-2007 @ 1:04PM
mary jellerson said...
Insurance companies have made health care a joke. By the time you get a diagnosis, due to delays foisted on you by the insurance red tape, all that is left for you is hospice. The MD's aren't listened to, and thier diagnosis have to be proved by innumerable tests that must be approved by the insurance company, so even if you know what is wrong with you, you cannot be treated for it until it is proved by autopsy. By that time all the wonderful treatments that have been made possible by advancements in science, don't do you any good. I think that the next step is for insurance co's to invest heavily in morturary's. That way, maybe they can keep thier profit margins up, even after they have killed the goose that was for a while, able to lay a golden egg. As for me and mine, we will go back to the old ways and take care of ourselves. My sister, a nurse, and part of the system, with health insurance, provided by the hospital she worked for, couldn't get treated appropriatly for her disease, because of insurance red tape. She wouldn't be any more dead now, had she had none, and we might have begun some alternative therapies earlier had she not depended on the system to which she devoted her entire life.
My husband and I don't have any health insurance, because we actually need it and it costs more than the mortgage. We have children that we have to house and feed and that is a more immediate concern than keeping insurance that doesn't serve us anyway. There are a lot of people like us, and we won't seek treatment even when we need it because if we do, we will lose any assets we have managed to acculumate. I havn't worked all my life in order to enrich a bloated inefficient system which has forgotten its mission and is only interested in trappings and government subsidy which is gotten, based on some immagined improvement in quality and duration of life. In reality, its all smoke and mirrors, very expensive ones. It is the government subsidy that has artifically inflated the price of medical care, beyond the average family's ability to pay for it. In a reality driven market, getting health care would be within the reach of everybody, and universal health care would be absurd. As things stand now, anything but government paid health care is beyond the reach of any but the most wealthy of us. So we have an invention of the government, big business health, subsidised by the government, which ultimately has to be provided by the government, and like all similar plans provided by "BIG BROTHER", it is top heavy and useless, and it raises our taxes.
9-12-2007 @ 2:44PM
Laura11121 said...
Amen Mary Jellerson!
9-12-2007 @ 2:45PM
Laura11121 said...
Amen Mary Jellerson!