An article in Health Services Research examines the interesting question of what groups, particularly stratified by income, age and source of income, receive health care and who pays for it. The authors consider all groups, including people in the military and those who are institutionalized. (HSR Article) It is an interesting question because health care costs are a tremendous burden for many people, but almost every one only pays a fraction of their health care costs directly. The authors looked the full value of the health services received by people, based on payments to providers, and the full amounts they paid in regard to health care, including premium share, cost-sharing, and taxes or fees. The health system amounts to a massive redistribution of income and wealth. The insurance system itself, private or public, tends to redistribute wealth from healthy individuals to sick ones. A variety of data sources were used to create models of the characteristics of the population and to identify spending on medical services. While the authors acknowledge the limitations of having to combine multiple data sets to get this kind of comprehensive analysis, the likelihood is that they are creating a fairly accurate picture.
In total, per capita payments for health care are about $9393. The article’s Table 1 is fascinating, a must-read. It gives health care payments as a percent of income by various categories. For the population as a whole, the payment is 18.7% of income. Tax payments are half of this, 9.6%. The lowest quintile of income pays $3093 on average, but this is 33.9% of their income, and again 7.9% of their income goes to taxes that pay for health care. For the top quintile on the other hand, the average payment is $22,161, or seven times more than the lowest quintile, but this is only 16% of income, and 11.3% of this group’s income is going to health care-related tax payments. You have to remember too, however, that income is highly skewed and even in this top quintile there a lot of people who don’t make a huge amount of money and a few who make very, very large incomes. Looking by age, people 19-34 have payments of around $10,374 each, those 35 to 49, $14,324, those 50 to 64, $16,119, and those 65 and over, only $7638. People with private insurance have far higher payments and taxes than those with public insurance like Medicaid and Medicare.
The value of health care received shows similar wide disparity. The lowest three quintiles of income, or 60% of the population, consumes far more in health spending than they pay. The second-highest quintile breaks even, and the top quintile pays far more than they consume. The lowest quintile in income actually gets 241% of that income in health care services value alone. The highest quintile only gets 4.7% of income in health care services. So it is kind of ludicrous, as it usually is, to talk about wealthy people not paying their fair share. I am not sure what definition of “fair” is being used in that case. It may be good social and public policy to engage in this redistribution but let’s stop the nonsense about fairness. And the punishing level of taxes on the members of this quintile who are not truly rich does have economic consequences.