The Impact of Healthcare Spending on the Middle Class

Being a member of the middle class is often regarded as having reached a comfortable position in life. Recent research reveals that an unprecedented percentage of middle class income is going toward healthcare spending.

Being a member of the middle class is often regarded as having reached a comfortable position in life. Made up of 120.8 million people, per data from the Pew Research Center, the American middle class has an average household income between two-thirds and double the country’s overall median salary. Recent research reveals that an unprecedented percentage of that income is going toward healthcare spending. Learn more about this trend:

More income going toward healthcare
According to recent research, healthcare spending is slowing down. A 2016 report from the Robert Wood Johnson Foundation projected spending to drop $2.6 trillion between 2014 and 2019, which is more significant than at first anticipated with the passage of the Affordable Care Act.

However, the middle class is not experiencing such a decrease in spending. Citing data from a June 2016 study by the Brookings Institution, the Wall Street Journal noted that those in this economic tier are now allocating 8.9 percent of their spending toward healthcare. That is up 25 percent from 2007, and this rate is higher than both upper and lower classes.

Potential reasons for increase
There are a number of possible factors for the rise in out-of-pocket healthcare spending among the middle class. A separate Wall Street Journal article speculated that an increase in deductibles may be one such reason. The majority of American workers receive health insurance through their employers. According to data from the Kaiser Family Foundation, the average deductible for this type of coverage went up 67 percent between 2010 and 2015.

Increases in drug prices may also factor into this trend. According to Time magazine, the costs for medications went up 10 percent between August 2014 and May 2015, which is a faster pace for price hikes than any other industry.

An overall best practice for reducing this type of spending is to focus on healthy living. For example, employers may benefit from starting a wellness program or providing nutritious snacks in the office.