Iowa Democrat says families spend $13,000 a year for health coverage

One of the biggest skirmishes in the health care debate has been over how much ordinary Americans pay for coverage — either under the current system, as Democrats like to point out, or under the new Democratic proposals, as Republicans regularly emphasize. In a Sept. 16, 2009, speech on the House floor, Democratic Rep. Bruce Braley of Iowa argued in favor of the House health care bill, H.R. 3200, by asserting that the status quo is financially unsustainable.

"Recent census data shows that the average American family spends over $13,000 a year for health care coverage," Braley said. "And if we don’t change what we are doing right now, in 10 years the average American family will be spending over $25,000 a year on health care coverage. That’s why the time to act is now, and H.R. 3200 does that by expanding access to quality, affordable coverage and bringing true health care reform to the American people."

For this item, we'll focus on the assertion that the average American family spends over $13,000 a year for health care coverage. We called Braley's office, and staffers acknowledged that Braley misspoke when he said the numbers come from the Census Bureau. In fact, the numbers come from a study released the day before Braley spoke — a survey of employer-provided health care undertaken annually by the Kaiser Family Foundation and the Health Research & Educational Trust, an affiliate of the American Hospital Association.

The Kaiser/HRET study found that the average annual premium for family coverage under an employer-based plan is $13,375. To come up with that figure, the study used data from 3,188 randomly selected employers with three or more employees.

But there's a problem: It's not accurate to say, as Braley does, that "the average American family spends over $13,000 a year for health care coverage." It's true that Kaiser/HRET found the total cost of health care premiums for a family to be $13,375 — but that is not the amount the average family pays out of its own pocket.

This is not a trivial distinction. For employer-based health care, which was the only kind Kaiser/HRET studied, the employer pays nearly three-quarters of the freight — $9,860 to be exact, compared with $3,515 for the employee.

Now, there are legitimate concerns about health care costing $13,375 per family per year. It's a substantial economic burden for companies to pay so much for their workers' health care, and doing so probably holds down employee wages and economic growth.

But Braley didn't say that the high premiums are an economic burden on the economy or on companies. He specifically said that $13,000 is what "the average American family spends." And that's not correct.

The Kaiser/HRET estimate of the family share being $3,515 is in the same ballpark as others. The Consumer Expenditure Survey, produced by the federal Bureau of Labor Statistics, found that household health care expenditures — which go beyond just health insurance premiums — were $2,853 in 2007, the last year for which data are available. (Only Americans with employer-sponsored health care are included in the Kaiser/HRET survey, which accounts for much of the difference between the two surveys.)

A third study, brought to our attention by Braley's staff, was by Milliman Inc., a health care and benefits consulting firm. A study of 2009 health care costs found that the average cost for a family of four is $16,771. The number is a bit higher than Kaiser/HRT's because it also includes family out-of-pocket costs rather than just the cost of insurance premiums.

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Calculating it this way does increase the size of the employee share of all health care costs. According to the Milliman study, employees paid $4,004 for health premiums and $2,820 out of pocket, for a total of $6,824. (The employer contribution was $9,947.) So, Milliman has employers paying a larger dollar amount than what Kaiser found, but the family portion is still well short of the $13,000 Braley cited.

As was the case in a number of other recent PolitiFact items we deemed False (including this one and this one ), Braley would have been correct if he'd simply tweaked what he said. If he'd cited data showing that "the annual health care premiums for the average American family are greater than $13,000," he would have been right.

But by adding confusion to the debate, Braley has muddied some already murky waters. In a Sept. 20, 2009, column prompted by the Kaiser/HRET study, Ezra Klein of the Washington Post summarized why misconceptions about the cost of health care matter.

"Imagine if people who touched a hot stove felt only a small fraction of the pain from the burn," Klein wrote. "That's pretty much what's happening in our health care system. It hurts enough that we would prefer it to stop, but the urgency is lost. That's the dilemma for Washington wonks trying to fix this mess: They look at the numbers and see health care costs crushing our economy, overwhelming our government, swallowing our wages. But the public isn't feeling it. Virtually no one cuts a $13,375 check for health care. Most pay 27 percent of it, or even less."

Jeff Giertz, the communications director for Braley, acknowledged PolitiFact's interpretation of the data, but added, "Regardless of how you measure it, the costs are high and getting higher — there’s certainly no disputing that."

Still, even inadvertently glossing over the meaning of these numbers gives the false impression that American families are paying approximately four times as much as they actually are for health care. We rate Braley's statement False.