Will Healthcare Become Unaffordable for Most of Us?

America has faced healthcare affordability crises before.

In the 1970s, soaring health costs prompted President Richard Nixon to warn that the system was becoming unsustainable. In the 1990s, with the public concerned again about rapidly increasing costs, President Bill Clinton proposed sweeping reforms that Congress never took up. Two decades later, the Affordable Care Act expanded insurance coverage but failed to slow the relentless rise in healthcare costs.

Each generation has been told the system was approaching a breaking point. Yet most insured Americans could still afford to get the care they needed.

Is this time different? Only 49% of U.S. adults said in a recent Gallup poll that they can afford needed healthcare and prescription drugs. This despite the fact that over 90% of the population has some type of health insurance. Clearly, health coverage has grown increasingly thin for many people.

There are hints of worse to come in the recent report of the Centers for Medicare and Medicaid (CMS) on the projected growth of U.S. healthcare spending from 2025-2034.

The headline in the report is that national health expenditures are expected to rise from $5.66 trillion in 2025 to nearly $9 trillion in 2034. Meanwhile, healthcare’s portion of GDP will jump to more than a fifth of the economy.

That’s worrisome enough, but the CMS actuaries also predict that decreased growth in disposable income — defined as earnings minus taxes and other deductions — will restrain overall health cost growth between now and 2034.

You might think that’s a good thing, but less disposable income for individuals means that they will have less to spend on healthcare. That’s why CMS projects that there will be a slower increase in healthcare utilization over the next decade: People won’t be able to afford it. That will translate to fewer office visits, fewer tests, fewer procedures and more healthcare needs not taken care of.

The growth of disposable income per capita has been decreasing for the past three years. CMS expects that trend to continue through 2034. Currently, inflation is outpacing wage growth, leaving nearly half of American households struggling to make ends meet.

Those and other households are already paying an extraordinary amount for healthcare. According to the Peterson-KFF Health Cost Tracker, the average family of four with employer-sponsored health insurance contributed $6,296 in premiums and incurred $3,564 in out-of-pocket spending in 2023. Median household income that year was $82,690. So, a household with a median income and job-related coverage spent nearly 12% of its earnings on healthcare. If healthcare costs continue to consume a higher percentage of disposable income, more insured people will have trouble paying for care.

Employers are also feeling the heat. Over the next decade, enrollment in private health insurance is expected to remain unchanged, despite the anticipated growth in the workforce. One reason is the growing transition of boomer employees to Medicare. Also, CMS predicts, more companies will stop offering health coverage.

If the past is a guide, those will be mostly smaller firms. But executives of some large companies have been issuing increasingly dire warnings about the future of healthcare. In a 2021 survey by the Kaiser Family Foundation, 87% of executives representing 300 companies with 5,000 or more employees said the cost of providing healthcare would be unsustainable in five to 10 years.

The CMS report projects that the percentage of all Americans with health insurance will decrease only from 91.7% to 90.5% over the next decade. That seems overly optimistic: For one thing, nearly 4 million people have already dropped their ACA plans due to the expiration of government subsidies. In addition, the Congressional Budget Office expects last year’s tax legislation to reduce enrollment in Medicaid and the Children’s Health Insurance Program by 10.5 million people.

But, even if the CMS prediction turns out to be accurate, the long-range direction of the economy, changes in people’s disposable income and employers’ exhaustion with insurance price increases point to the same conclusion: By 2034, most people will have less access to healthcare and it will be more expensive, relative to their incomes, than it is today. Whether that will lead to a breakdown in the healthcare system is unclear. But when a system is unsustainable, it eventually stops working.

We don’t have to wait for that to happen. Instead, we can work together across the political divide to build a new system that provides high-quality, affordable healthcare for all. Such a model would rescue primary care from its dangerous decline. It would focus on improving population health, so fewer people would need expensive specialty and hospital care. It would eliminate the market power of big health systems. It would rein in the big insurers without putting them out of business. Above all, it would be dedicated to healing and compassion and the principle that everyone deserves good healthcare.