Healthcare costs hitting low income groups hardest

A study of trends in healthcare affordability found that between 1995 and 2012, while healthcare became less affordable for American households across the board, the lowest income groups experienced the greatest decline in affordability of care.

Economists at the Federal Reserve Bank of St. Louis examined data from a CDC survey, which asks people in different income groups if there was a time in the past year when they needed to see a doctor but could not due to the cost.

For the period from 1995 to 2012, there was a significant increase in the rate by which the poorest quintile of the population reported deferring health care because of cost – 23.3% in 1995 and 32.7% in 2012. The second quintile of earners also felt the burden of increased health care costs, with 15.1% reporting deferring care in 1995, and 24.2% in 2012.

“Between 1991 and 2012, health care costs increased an average of 4.2 percent per year, while inflation increased an average of 2.5 percent per year. This increase in health care costs, together with an increase in income inequality, may have made health care unaffordable for lower-income groups, enlarging the medical consumption inequality between the rich and poor.”

YiLi Chien, St. Louis Fed

The study attributes the overall drop in affordability to healthcare costs accelerating ahead of inflation. Although Medicaid and safety net programs are available to some of the country’s poorest residents, eligibility criteria vary significantly by state, and rising income inequality likely contributed to the widening health affordability gap.