post by Bill Gardner
From Patricia Ketsche and her co-authors in Health Affairs, a study on what people in the US spend on their health care.
We spend money on health care in several ways. One way is out of pocket costs, that is, direct purchase of health services, or insurance co-pays. Another is health insurance premiums, and another is state and federal taxes that pay for health programs. The authors estimated what we spend in these various ways using data from the Current Population Survey for 2004. They then broke this spending down by income quintile, and calculated the percent of income spent on health care for people in each quintile.
What they found was that when you measure how much of each dollar of income goes to health care, people on the bottom pay more than everyone else. Those on the bottom spent almost a quarter on health care, whereas everyone else spent about 15 cents.
This may seem counter-intuitive. After all, the poor are those who are most likely to qualify for Medicaid, so it's true that quite a bit of their health care is subsidized by those in the higher quintiles. But it makes sense when you recall two things. First, the poor still have out of pocket health care expenses, and they often pay quite regressive state taxes, some of which pay for healthcare. Second, we are looking at a percentage of income, and that denominator is quite small in the lowest quintile.
So, the data show that those with the least income spend a bigger chunk of that income on healthcare than everyone else. This helps explain why the poor have higher rates of no-shows for medical appointments, and otherwise seem to 'neglect' their health. It may be that they sometimes skip appointments because the marginal payment for an additional service or medication, however small it may be, cuts deeper into their budgets than it would for you.
Is it fair for the poor to spend more of their income on health care than others? I don't think so. As Angus Deaton summarizes, the poor have worse health than others:
Richer, better-educated people live longer than poorer, less-educated people... people whose family income in 1980 was greater than $50,000, putting them in the top 5 percent of incomes, had a life-expectancy at all ages that was about 25 percent longer than those in the bottom 5 percent, whose family income was less than $5,000. Lower mortality and morbidity is associated with almost any positive indicator of socioeconomic status, a relationship that has come to be known as "the gradient."
Greater need is another reason why they spend more (on a percentage basis) on health care. Given that the poor have more health problems to cope with, it seems unfair that paying health care should also bite them harder.