The Economy

What Health-Care Affordability Crisis?

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A recent Gallup poll finds Americans are unable to afford health care. A closer look at the data suggests otherwise.

Some 46 million Americans wouldn’t be able to pay for essential health care if they needed it today, according to a new Gallup poll. That’s nearly one-fifth of all adults.

This finding suggests a full-on health-care affordability crisis. Or it would, if the numbers added up. But they don’t.

A closer look at the data reveals that for the most part, Americans aren’t struggling to afford health care. Rather, they’re struggling to prioritize their spending.

Eighteen percent of those polled by Gallup said that someone in their household had foregone care in the last twelve months because of cost. Thirty-five percent said they had cut spending on recreation to be able to afford health care.

These are eye-opening findings. But polls tell us what people say; numbers show what they really do. And there’s plenty of economic data to show that things are more complicated than Gallup’s survey says.

For instance, are Americans really delaying health care because they can’t afford it? If they were, we should have seen that pent-up demand satisfied in January, when household incomes rose by 10 percent.

That month, consumer spending jumped 5.3 percent. It wasn’t the health-care sector that saw the biggest gains, according to CNBC. The sharpest increases went to electronics and appliances outlets, furniture stores, and online retailers.

In other words, when Americans got their hands on surplus cash, they didn’t rush to the doctor’s office. They bought computers and remodeled their kitchens.

Despite the pandemic, between February 2020 and February 2021, U.S. household income rose 13 percent, according to the Commerce Department. Again, that extra income did not go to health care. In fact, consumer spending on health care remained down year-on-year as recently as January.

Where’s all that money going? The personal-savings rate leapt 80 percent last year. The food-delivery business is booming. Pet supplies are flying off the shelves. Harvard’s Joint Center for Housing Studies projects that spending on remodeling will increase on an annualized basis through early next year.

Digging deeper into Gallup’s data gives a better idea of what’s really going on. Twenty-one percent of people earning $180,000 or more told the pollster that they reduced spending on “recreational and leisure activities” over the last year “in order to afford care.”

Logic tells us that many of these people cut their leisure spending because of pandemic-induced restrictions. But even taking them at their word, self-reported spending choices are not evidence of a crisis. Everyone would rather spend money on “wants” such as recreation rather than “needs” such as health care. Those who make three times the median household income are well-positioned to make that trade-off.

Of course, many Americans do lack access to affordable health coverage. Most people Gallup interviewed thought the solution was more government spending and regulation.

But that would be counterproductive. Federal subsidies and price controls only make health care harder to access. The bans on low-cost short-term health plans in many states leave some consumers without affordable options. Price caps on drugs lead to fewer medicines coming to market. And excess red tape makes it harder for health-care providers to compete based on price.

As a group, Americans consistently spend more on eating out and entertainment than health care, according to the Bureau of Labor Statistics. That’s a perfectly reasonable choice, but one that suggests we can adjust our priorities when we need to.

Sally C. Pipes is the president, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is The False Promise of Single-Payer Health Care (Encounter). Follow her on Twitter @sallypipes.

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