Sunday, January 22, 2012

A Critical Factoid for Comparing Well-Being and Household Cash Flow in America

Many people say that incomes are stagnating. They are partially right. Take-home pay is stagnating.

But, compensation is not stagnating. Here’s where all the money is going:

Had health care costs tracked the rise in the Consumer Price Index, rather than outpacing it, an average American family would have had an additional $450 per month—more than $5,000 per year—to spend on other priorities.

That’s a payment on an additional, fairly nice, new car for every family in America.

This does not cover a huge amount of time … only 1999 to 2009. The amount lost over the last several decades would be several times this (most people don’t know that the worst decade for healthcare price inflation was … the 80s).

Even worse, in our system, while much of the money for this extravagance comes from the middle-aged and seniors, almost all of it is spent on seniors.

Via Marginal Revolution via Timothy Taylor.

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