Health Care Costs and Income Disparity

The McKinsey Global Institute recently published an analysis of the impact of health care costs on income disparity. (Registration Required) The study shows that only 11% of those with high income (over $130K) are not covered by employer health insurance, while this rises to 19% for high middle income ($58-130K), 43% for low middle income ($27-58K), and 78% with low income (<$27K). This does not include government-provided health insurance, such as Medicaid, for which only very low income individuals qualify.

Furthermore, employers pay twice as much for health insurance for their high income workers (top 10%) compared to their low income workers (bottom 30%). This means that high income individuals are more likely to have health insurance plans that provide robust coverage. Low income individuals, even if they have coverage, are more likely to have higher deductibles and coinsurance and copayments, while they are least likely to be able to afford these out of pocket payments. This is especially important since health care costs were reported to be a major cause of bankruptcy, even before the current “great recession.” (Comment on initial article)
























The McKinsey analysis reminds us that employer coverage of health care is almost universal for those with high incomes, and it is increasingly rare for those of low income. Furthermore, employers pay twice as much for health insurance for their high income workers (top 10%) compared to their low income workers (bottom 30%). This means that high income individuals are more likely to have health insurance plans that provide robust coverage. Low income individuals, even if they have coverage, are more likely to have higher deductibles and coinsurance and copayments, while they are least likely to be able to affort these out of pocket payments. This is especially important since health care costs were reported to be a major cause of bankruptcy, even before the current “great recession.”

See http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.63
http://content.healthaffairs.org/cgi/content/full/25/2/w74