Health Affairs

The “fiscal cliff” deal raised taxes on households earning more than $450,000 a year and sheltered everyone else from an automatic income tax increase. Tough decisions about spending were put off until March 1, the new deadline by which Congress must take deficit-cutting action if it is to avoid automatic across-the-board sequestration cuts.

As both sides return to the negotiating table, one of the biggest bones of contention is what to do about entitlement spending, particularly Medicare. Many Republicans want to raise the age of Medicare eligibility to 67. President Obama and congressional Democrats do not.

It will be difficult, if not impossible to meet a reasonable fiscal target without addressing federal health care spending. However, the current fight is misplaced. The health care “entitlement” we need to reform is the notion that America’s health care system is entitled to an ever-growing share of America’s wealth.

In the September, 2011 issue of Health Affairs, we examined the impact of a decade of health care cost growth on the income of a typical, median-income family of four with employer-sponsored health insurance. To recap, between 1999 and 2009, the middle-class family’s nominal monthly income increased by $1,910. But after factoring in the rise of consumer prices and a near-doubling of health care spending (due to rising insurance premiums, growth in out-of-pocket health care spending, and taxes to support government spending on health care ), the family had little left over.

Their financial position would have been even worse if deficit spending, which did not exist in 1999, had not grown dramatically over the decade. If federal taxes had simply been increased enough to pay for growth of government spending on health care (ignoring all other deficit spending), the family would have ended 2009 with $290 less per month to spend than they had in 1999.

In the two years since we concluded this analysis, the situation has grown worse for the middle class. In 2010 and 2011, our median-income family’s out-of-pocket spending and tax burden devoted to health care didn’t grow much (due respectively to the effects of the recession and historically low growth in Medicare spending), but the cost of their employer-sponsored health insurance increased by almost 10 percent, from $13,770 in 2009 to $15,073 in 2011. (It grew another 4 percent in 2012.) So although their total monthly compensation grew modestly – about $170 per month – their employer held back an additional $57 per month to cover its share of the rising premium, and the family had to chip in another $51 per month to cover the rest. This left them with only $62 more per month, or roughly $14 per week, to address the rising costs of other goods and services.

Thus, two-thirds of our family’s modest income gain was consumed by rising health care costs. Little was left for anything

The horrific massacre of 27 children and adults in Newtown, Connecticut ranks second only to Virginia Tech among U.S. mass shootings. These tragedies are part of a lengthening list of mass killings in such varied places as a shopping mall, a movie theater, a Sikh Temple, a high school, a congressional constituent meeting, and a military base. But this one was different. Not only were the death toll particularly high and the killings particularly savage; the killer’s victims were first-grade students, teachers and school staff.

Millions are deeply touched by this tragedy, but few of us can fathom the shock and grief felt by the survivors, parents, family members and friends of those who died. Our first concern must be to comfort them and support what will likely be a long and difficult recovery. But few people are prepared to stop with that. This event, unlike its predecessors, has sparked a movement to challenge the inevitability of mass shootings, not to mention the thousands of individual gun homicides that occur each year in the United States.

In response, President Obama has signaled his intention to submit legislation to the Congress by end of January. To prepare for this action, he is convening an Administrative task force, led by Vice President Biden, to craft a package of proposals. What this panel recommends, and how the public reacts over the next few weeks, could be decisive in determining what will come from this terrible tragedy.