The Cost of Doing Nothing

Introduction
The U.S. health care system is in crisis. Health care costs too much; we often get too little in exchange for our health care dollar; and tens of millions of Americans are uninsured.

Our economy loses hundreds of billions of dollars every year because of the diminished health and shorter lifespan of the uninsured. Rising health care costs undermine the ability of U.S. firms to compete internationally, threaten the stability of American jobs, and place increasing strain on local, state, and federal budgets. As health care costs continue to rise faster than wages, health insurance becomes more and more unaffordable for more and more American families every day.

Yet, the recent financial services meltdown has led some people to suggest that we cannot afford health reform and that fixing our broken health care system will have to wait once again. But waiting comes with a price. The crisis worsens every day that we do not act. Premiums will continue to rise; Americans will continue to pay more for less-generous health coverage; and fewer employers will offer health insurance to their workers.

We must reform our struggling health system not in spite of our economic crisis, but rather because of the impact health care has on the American economy. The economic and social impact of inaction is high and it will only rise over time.

Economic Cost
The economic cost of failing to fix our broken health care system is greater than the upfront expense of comprehensive health reform. In 2006, our economy lost as much as $200 billion because of the poor health and shorter lifespan of the uninsured. This is by most estimates as much as, if not greater than, the public costs of ensuring all Americans have quality, affordable, health coverage. The economies in California, Texas, and Florida suffer most from productivity loses stemming from the uninsured. Yet, Delaware’s economy loses more per uninsured person -- over $6,800 per uninsured resident.

Affordability
As health care costs continue to grow faster than wages, health insurance will become more and more unaffordable for more and more American families every day. The financial burdens associated with health care and health insurance will only get worse over time without action.The cost of the average employer-sponsored health insurance plan (ESI) for a family will reach $24,000 in 2016. This represents an 84 percent increase over 2008 premium levels. Under this scenario, we estimate that at least half of American households will need to spend more than 45 percent of their income to buy health insurance.

New Mexico, Maine, and South Carolina will see the greatest increases in the cost of family policies over the next eight years. In Maine, the average family employer-sponsored insurance policy will top $30,000 by 2016. According to our estimates, households in South Carolina, Louisiana, and Maine will have to spend the greatest shares of their income in order to purchase health insurance in 2016. Half of households in South Carolina will have to spend more than 62 percent of their incomes to buy health insurance in 2016.

Coverage
The financial protection offered by health insurance coverage will continue to deteriorate if we do not act. Americans will pay more for less and copayments and deductibles will rise. The average deductible nationwide will increase 73 percent to almost $2,700 by 2016. Average copayments will climb to $30.

Residents from Delaware and Vermont will see the biggest difference in their deductibles in 2016. Rising deductibles combined with higher premiums will make many Americans financially vulnerable to high health care bills. Residents of New Mexico, Massachusetts, and Hawaii will notice the biggest difference in how much they pay when they see a doctor in 2016. In New Mexico, a single office visit could cost an insured patient almost $50.

Conclusion
U.S. businesses, governments, and American families have all demonstrated that health care reform is a vital component of their long-term economic stability. Our nation will recover from its current financial services crisis, and when it does the U.S. will still be faced with a crumbling health system. As the data in this report shows, the cost of failing to act is high and it will only rise over time.

For the full text of this report and the accompanying state profiles, click here. Additionally, our new "State of State Health" website lets you explore and compare states on a wide range of metrics.