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Affordability

By Matthew Yglesias  

"Affordability"

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I was working on a post about the whole question of whether health insurance would really be affordable under the health care bill before the Senate, when I actually stumbled on a somewhat different point. This is a chart I made based on Consumer Expenditure Survey data showing health care spending as a proportion of income and as a proportion of household expenditures, broken down by income quintile:

healthspending

What I think this really should remind us of is the basic fact that being poor in America is not affordable situation. For the bottom 40 percent, overall expenditures substantially exceed income. Indeed, the bottom 20 percent spend over 100 percent of their pre-tax income on housing and transportation alone. They have literally no extra income “left over” for food, utility bills, and clothing to say nothing of health care.

Which is just to say that to look at the health care situation in isolation and say “does this legislation really make it affordable?” is to an extent to miss the point. It’s already not affordable. Nothing is affordable at the bottom of the pyramid. The bill is, however, highly redistributive. The extra tax burdens will fall overwhelmingly on prosperous people, and gives a bunch of extra money & services to people in the bottom half. Unless you think health care is a really frivolous expenditure item such that getting more of it will do very little good (this, for example, is cool but totally useless and bizarrely expensive) then it’s hard for me to see how economically struggling families don’t on balance come out of this less economically struggling.

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