Health Care Costs: How Much Can U.S. Households Bear?
Health insurance premiums and out-of-pocket payments can add up quickly. They take food off the table while at the same time, making it more difficult for the American people to invest in themselves.
Social Security recipients are a case in point. The average beneficiary in 2026 will receive $2,071 a month. Out of that money, Social Security withholds money for Medicare Part B. Other expenses may follow. Below is an illustrative breakdown of a Medicare beneficiary who purchases a Medigap plan to reduce out-of-pocket expenses
- Social Security Income $2,071
- Less:
- Medicare Part B 203
- Medicare Part D 35
- Medigap 217
- Out-of-pocket 236
- Total Deductions: 691
- Remaining Income: $1,380
Approximately one-third of the average Social Security benefit goes toward Medicare premiums and other out-of-pocket health care costs. These deductions do not include any spending for dental, vision or hearing expenses, services that Medicare traditionally does not reimburse beneficiaries for.
This is bad news for roughly one-half of America’s elderly population, for whom Social Security provides the majority of their retirement income.
At the very least, senior citizens on fixed incomes bear a heavy financial burden covering the costs that Medicare does not pay for. And unfortunately, that amount says nothing about medical visits forgone because of a lack of household funding.
Working-age adults, alternatively, pay roughly nine percent of their income to health insurance premiums and out-of-pocket expenses (See calculations below). By comparison, in absolute terms, working-age adults pay approximately $461 a month verses $691 for those on Social Security.
So to answer the question, “How much in health insurance premiums and out-of-pocket expenses can the American people bear?”, the answer is “more than they should.”
Americans need a healthcare cost break.
How I came up with 9%
First, I used NHE Table 15.2 to see how much money workers spent on premiums for company sponsored plans ($382.1B) and individual policies ($86.3B). I then added those two numbers, $382.1B + $86.3B, and got $468.4B. That is the amount working age adults spent on health insurance premiums in 2024.
Second, I divided health insurance premiums paid by 120,257,000, which is the number of full-time workers in 20241. $468,400,000,000/120,257,000 = $3,895 a year. $3,895 is how much each worker pays on average for health insurance premiums a year in the US.
Third, I divided out-of-pocket costs from NHE Table 15.2 by the total number of people in the United States. I got $556,600,000,000/340,100,000 = $1,637 per person per year.
Fourth, I added $3,895 + $1,637 = $5,532 a year. That is how much the average U.S. worker pays for health insurance premiums and out-of-pocket expenses each year.
Fifth, to find out how much the median pay was, I used $1,185 a week in current dollars for the Fourth Quarter of 20241. I multiplied that figure by 52 to get the annual pay, $1,185 x 52 = $61,620.
And last, to find out what percent of a worker’s pay went to health related costs, I divided $5,532 by $61,620. That came out to approximately 9 percent.
Note: For health insurance premiums, I divided total premiums paid by the number of full-time workers. To estimate out-of-pocket expenses, I divided total out-of-pocket spending by the U.S. population. This is an approximation, not an exact figure.
1 https://www.bls.gov/news.release/wkyeng.t01.htm