Q&A of the Day – TrumpCare & How Much Healthcare Is Actually Used
Each day I feature a listener question sent by one of these methods.
Email: brianmudd@iheartmedia.com
Social: @brianmuddradio
iHeartRadio: Use the Talkback feature – the microphone button on our station page in the iHeart app.
Today’s entry: @brianmuddradio Great work exposing Obamacare lies! Question. Americans don’t spend $27k for healthcare – but how much is really used?
Bottom Line: It’s a great question that rolled in following my recent story What Comes Next for ACA Polices where I said this: Currently the average cost for an exchange-based policy for a family of four is $27,025. How many families come anywhere close to needing/using $27k+ in healthcare per year? So, about that...
Healthcare costs, excluding insurance premiums, look like this (based on 2023 data):
- Average American: $1,514
This represents the national average out of pocket spending per person across all ages and insurance statuses. It excludes any premium contributions and reflects costs for services like doctor visits, hospital care, and prescriptions.
- Average family of four: $6,056
This per capita scaling is a standard approach used in health expenditure analyses for estimating household totals.
So that’s the real cost of healthcare for the average person and the average family per year. However, consider this as it pertains to the debate about the COVID-era Obamacare tax credits that propped up the unaffordable ACA plans on the exchange and are currently in focus as they’re set to expire at the end of the year. The average per person ACA exchange-based health insurance policy is $5,892 this year. The average subsidy for that plan is $5,727 per plan this year. In other words:
- The average American’s actual healthcare expense is only 26% of what the cost of their health insurance policy costs
- The average ACA policy subsidy is $4,213 more than what the actual cost of healthcare is
This is huge for multiple reasons. First, imagine if the cost of healthcare declined by 74%. How significant would that be for the average family? And here’s the thing; it could decline by an average of 74% if we weren’t paying for health insurance at the levels we’re currently paying for it.
As I’ve consistently said for decades...the key to solving healthcare affordability challenges is consumer price transparency. The biggest obstacle to price transparency is the current insurance first model. Health insurance should be no different than any other insurance product. If you have regular healthcare needs you should go to your healthcare provider and pay for it. If you have a major medical need or emergency, you should file an insurance claim. If we used this model, we’d lower the total cost of healthcare by greater than 70%! Instead, the difference is the model that’s going primarily to health insurance companies, with occasional extra bloat within the healthcare service industry, as providers commonly know what they order, charge, etc. to each of the health insurers. It’s for this reason that the best answer for a path forward is with Trumpcare, not extended Obamacare subsidies.
President Trump’s proposal is straight-forward. Provide people who’ve used subsidies with the money directly instead that they can use for the healthcare they need. The merits of government handouts for healthcare may still be a point of contention for some; however, this would be a big step towards an end of the insurance-first, exchange-based system that only becomes more unaffordable and unsustainable by the year.
The biggest falsehood that’s perpetuated in the healthcare debate is that health insurance equals healthcare. It most certainly doesn’t. For many, especially in the era of high deductibles as the norm, the cost of paying for health insurance is the greatest obstacle to actually affording healthcare. This analysis clearly illustrates the point. There are two sides to stories and one side to facts. These are the facts.