Do Coloradans Sacrifice to Afford Health Care?

Published August 1, 2009

According to a Denver-based advocacy group, Colorado families increasingly must sacrifice “basic necessities” in order to pay for health care and health insurance.

“The more a family spends on health care and health insurance, the less it spends on basic necessities and investments in long-term opportunities,” the report from the Colorado Center on Law and Policy contends. “When families spend more than 5 percent of their household income on health care, they make substantial tradeoffs on other important expenditures, such as transportation, housing, and child care.”

Linda Gorman, director of the Colorado-based Independence Institute’s health care policy center, says the report is devoid of reliable data and important information about what tradeoffs households are actually making.

“The Cost of Care: Can Coloradans Afford Health Care?” released in April by CCLP, claims families are being forced to cut back on important long-term investments such as savings and education in order to pay for health care.

‘Lacking in Reliable Data’

Gorman questions the report’s accuracy.

“[The CCLP study] lacks both context and any kind of remotely reliable data,” said Gorman. “Organized around the notion that people should not have to consume less of goods like transportation, education, food, and housing in order to consume more health care, it exhibits a basic ignorance of the economics of household finance.

“We know nothing of individual family structure, marital status, household arrangements, employment, health, or participation in government programs,” Gorman added. “The report claims that health care is unaffordable without even discussing who has what third-party coverage or giving the reader an idea of what people actually spend on health care and when those costs occur.”

The study reports the percentage of income being spent on health care by individuals with incomes under 500 percent of the federal poverty level and families of four making below $106,000 annually. But it “failed to mention some very important details about the people included in the study, such as whether the 5 percent of income they reportedly spent on health care was based on weekly, yearly, or lifetime income,” Gorman said.

“Income is a flow, not a stock,” Gorman noted. “If one doesn’t specify a unit of time, the claim is meaningless.”

‘Scare Tactics’ Decried

Liz Feder, health policy analyst for CCLP, defended the report. “This report will do much to put the seldom-defined idea of affordable health care into some context—something currently lacking from the health care debate,” she said.

Peter Pitts, director of the Center for Medicine in the Public Interest, disagrees, saying studies such as this one utilize “scare tactics” to convey a particular message.

“Many Americans define health care in different ways,” said Pitts. “For example, the term ‘health care’ in relation to a person’s budget may be interpreted by one American simply as the cost of health insurance, while to others it may include prescription drug costs, health insurance, medical bills, and more.

“Health care is a very individual thing,” Pitts added, “so to throw the idea around as a generality is a mistake. With a better definition of ‘health care’ and a more meticulously conducted study, it is possible these numbers could prove to be less daunting than [the CCLP report] makes them appear,” said Pitts.

Katie Emanuel ([email protected]) writes from Georgia. Thomas Cheplick ([email protected]) writes from Massachusetts.

For more information …

“The Cost of Care: Can Coloradans Afford Health Care?” Colorado Center on Law and Policy: