Unpacking Four Decades of Health Insurance Cost Inflation
The Consumer Expenditure Survey (CEX) provides a wealth of data spanning forty years on the spending habits of American households. This data includes the average expenditure on health insurance by the "consumer unit" as surveyed by the U.S. Census Bureau. Like many other economic factors, health insurance has seen a significant cost inflation over the past four decades.
Changes in Health Insurance Costs Over Time
A chart, provided by the Political Calculations blog, illustrates the change in health insurance costs from 1984, the inaugural year of the CEX, through to 2023, the most recent year for which data was released last month. Over the past 40 years, one major factor has significantly altered the trajectory of the average cost of health insurance coverage for American households or consumer units.
In 1984, the average American household, or consumer unit, spent an average of $370 on health insurance. This figure steadily increased over the years, reaching an average cost of $980 per U.S. household by 2000.
Accelerating Cost of Health Insurance
Between 2000 and 2010, the average cost of health insurance grew at an accelerated pace, reaching $1,826 by 2010. If this growth trend had continued, it is estimated that the average American household would be paying $2,927 for health insurance in 2023.
However, the passage of the Affordable Care Act in 2010, which was fully implemented by 2014, disrupted this trend. The stated objective of this law was to make health insurance more affordable for Americans.
The Impact of the Affordable Care Act
In 2023, the average cost of health insurance paid by American households was more than double what it was in 2010. With an average cost of $4,049 per household, this expense is more than 38% higher than the trend that existed in the decade before the Affordable Care Act was enacted.
The chart also shows that the cost "curve" for health insurance has been bending upward since 2021, inflating more rapidly in the years following the 2020 coronavirus pandemic.
In the coming weeks, the Political Calculations blog will explore other aspects of how American consumer spending has changed over the past four decades using the latest CEX data.
Bottom Line
The cost of health insurance has seen a significant increase over the past four decades, with a notable acceleration following the implementation of the Affordable Care Act. Despite the Act's intention of making health insurance more affordable, the average cost for American households has more than doubled since 2010. What are your thoughts on this trend? Share this article with your friends and discuss. Don't forget to sign up for the Daily Briefing, delivered every day at 6pm.
Unpacking Four Decades of Health Insurance Cost Inflation
The Consumer Expenditure Survey (CEX) provides a wealth of data spanning forty years on the spending habits of American households. This data includes the average expenditure on health insurance by the "consumer unit" as surveyed by the U.S. Census Bureau. Like many other economic factors, health insurance has seen a significant cost inflation over the past four decades.
