The Declining Middle Class and the Use of Healthcare in the United States

Middle-class households are finding more of the cost of healthcare shifting to out of pocket than ever before.

If you work in a nursing environment and/or believe you fit into the middle class in the United States, it is important to read this. According to the Wall Street Journal, the mix of who is getting crushed by healthcare expenses is changing rapidly. 

David Cutler, a Harvard healthcare economist, said this may be a story of “three Americas”. 5 One group, or the ‘stinking rich’ as Alexandria Ocasio-Cortez describes them, can afford healthcare easily. The poor can seek access to public assistance when necessary. But the lower-middle to middle-income categories, saddled by massive student loan debt, stagnant wages, and possible elder care, those are the Americans being squeezed tighter with every paycheck. 3

Unfortunately, that “middle class” (described by Pew as those currently making between $40,500 and $122,000) that many of us grew up enjoying is disappearing. “Fewer young Millennials in 2019 are considered middle class compared to Baby Boomers when they were in their 20’s.” Three factors that are particularly challenging for today’s workers are education, housing, and healthcare. Real disposable income for workers has not grown in over a decade, despite 10 years of the best Bull market on Wall Street. While incomes for the top 10% are hitting new highs, those in the middle classes are struggling. About 70% of Baby Boomers hit the middle class by their 20’s. For Millennials, that number is 60% and falling. Worse, the risk of losing their upward mobility is high. 3

Middle-skill workers are now more likely to be lower income rather than middle income. Why? The stability of adults living in middle-income households marks a decade’s long trend downward. From 1971 to 2011, the number of adults in the middle class fell by 10 full percentage points. Additionally, many households never fully recovered from the recession of 2008. But the real problem for Americans? Healthcare. 4

In 2015, a Kaiser study found healthcare deductibles for individual workers had risen 67% in the five years since 2010, which was roughly seven times growth earnings over the same time period, without adjusting for inflation. A separate Kaiser analysis of millions of insurance claims found patient cost-sharing during the years between 2004 and 2014 was driven by a 256% jump in deductible payments. As a result, in 2015, 8% of Americans’ household spending went towards healthcare, up from 5.8% in 2007, according to the U.S. Labor Department. 5

These are statistics representing a snapshot of American families!

But what does this mean for the way Americans are utilizing healthcare? Healthcare spending is no longer considered a basic item for American families. For the shrinking middle class, it may be considered a luxury that is optional, particularly when deductibles are out of reach.

That was exactly the case for Cindy Sikkema, a 47-year-old writer in Boise, Idaho. Her husband’s insurance plan was eliminated through his employer. They chose a new plan, one of the alternatives offered by his company. Although the monthly payment was low, and fit into their budget, the deductible was horrendous at $6,850/year. After having a huge bill for a simple mammogram, the previous year ($1,500), they wanted to utilize their plan carefully. Unfortunately, any physician visit would now cost $180 instead of the $20 to $30 they had to pay for the previous plan. 5

Everything else in their life had to be carefully budgeted around the new expense. One hit (e.g. an Emergency Room visit) and they could be wiped out. Cindy decided they could no longer afford to shop at retail stores. Clothes were purchased at secondhand and consignment stores. An overseas vacation would be eliminated in favor of camping. Unfortunately, the Sikkema family is not alone. Many families may decide to eliminate insurance and gamble on one year, maybe two without the assistance of insurance at all.

But insurance isn’t the only hit for American consumers. Just ask B.J. Welborn, 66, a leukemia patient who thought her worries might end once she became eligible for Medicare coverage. Prescription drug costs have continued to skyrocket for consumers. 5

Unfortunately for B.J., she was taking a medication called Gleevec, and the price of her medication had risen from $24, 000 to over $121,400 in the 15 years since B.J. was initially diagnosed. She must now pay a co-pay of $491/month for her Gleevec, seven times what she paid under her old Blue Cross/Blue Shield plan. Golden years? Not for this senior! B.J. says she did not picture her retirement as a trip into “anxiety and fear.”

One of the best resources to be found related to the costs (socioeconomic and financial) regarding healthcare and the middle class is the Middle-Class Security Project, an initiative of the AARP Public Policy Institute, completed by Georgetown University. This document discusses not only the long-term effects of flattened wages and unrestricted healthcare costs but also the impact on families. 1

One example is family structure, e.g. the loss of potential wages when one family member stays home or restricts income to care for an elderly parent or relative. This is usually undertaken by a female in the family when an elder lacks long-term care insurance. An occurrence such as this may disrupt the ability of a middle-income family even further in seeking/maintaining health maintenance, as well as basic care for younger family members. 1

The last item of concern related to middle-income families is housing. Forbes has predicted within the next decade that what we know as the middle-class might disappear almost completely as Baby Boomers retire, and technology begins to menace the wealth of remaining workers. Is this feasible? It seems unlikely now. But with housing starting at an even $1 million on both coasts (San Francisco, New York), and homelessness rates climbing sharply, who knows? 2, 4

With all these changes, nurses providing care face unique challenges for those seeking healthcare in the coming years. We need to encourage healthy behaviors for those who may not be able to ensure basic needs, such as screening appointments, or physician appointments when they feel ill. We may have to worry if they are choosing to see a physician but then may not be able to pay a bill that is equally important or provide healthy lunches for school-age children or elders. We may need to ask (gently) if they need assistance with forms to seek help paying for medications, or if they are food insecure.

Unfortunately, as AOC has questioned, we may not know exactly how many ‘stinking rich people there are in this country’, but they don’t have to worry about paying for healthcare.

For those in the middle of the equation, they do.

Declining Middle Class Footnotes

Websites:

  1. Aarp.org AARP Public Policy Institute “Middle-class security project.” The effects of rising health care costs on middle-class economic security. Georgetown University. Komisar, Harriet. Jan. 2013.
  2. Amp.timeline.net “The shrinking middle class: how we got here and why.” Fortune staff. Dec. 26th, 2018.
  3. Cnn.com “How many stinking rich people are there in the U.S.?” Wolf, Z. Wed, May 15th, 2019.
  4. Forbes “The middle class might nearly disappear in the next decade.” Watson, P. March 8, 2018.
  5. Marketwatch.com “Why the middle-class is shrinking.” Arends, B. April 22, 2019.
  6. Wsj.com “Burden of health-care costs moves to the middle class.” Sussman, A. August 25, 2016.
  7. Aarp.org AARP Public Policy Institute “Middle-class security project.” The effects of rising health care costs on middle-class economic security. Georgetown University. Komisar, Harriet. Jan. 2013.
  8. Amp.timeline.net “The shrinking middle class: how we got here and why.” Fortune staff. Dec. 26th, 2018.
  9. Cnn.com “How many stinking rich people are there in the U.S.?” Wolf, Z. Wed, May 15th, 2019.
  10. Forbes “The middle class might nearly disappear in the next decade.” Watson, P. March 8, 2018.
  11. Marketwatch.com “Why the middle-class is shrinking.” Arends, B. April 22, 2019.
  12. Wsj.com “Burden of health-care costs moves to the middle class.” Sussman, A. August 25, 2016.

 

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