People in the middle class in the United States have long been seen as the economy’s backbone. But because inflation is rising faster than pay growth, it’s getting harder and harder for many families to keep up their standard of living.
Important services that Americans in the middle class may have a hard time paying for in the coming years. We will talk about the rising costs of living and the long-term effects that could happen to people and to society as a whole.
Impact on Middle-Class Families
There are already effects of this upward trend being felt, mostly by middle-class families:
- A lot of people are choosing high-deductible plans because they lower their monthly costs. People often put off getting care because they want to save money, which delays care.
- Others are choosing coverage that isn’t as complete, which leaves them open to huge medical bills.
Anyone trying to figure out how the healthcare system works today needs to understand these processes. As costs keep going up, it’s more important than ever to make smart decisions about health plans and treatment options.
The decisions we’re making now will have very bad effects in the future. If you put off preventive care, you might have bigger health problems in the future. Also, not having enough coverage can lead to medical bankruptcy, which is the main reason people lose their money in the US.
Rising Subscription Fees
As costs rise due to inflation, many middle-class families will have to make tough decisions about how to spend their money on fun. Almost every major streaming service raised the price of ad-free viewing in 2023.
Adapting to Entertainment Costs
These methods not only help keep costs down, but they also show a change in how middle-class Americans get pleasure. These strategies may be useful, but they may limit access to a wide range of cultural material and shared experiences.
Health Insurance Premiums: The Rising Cost of Comprehensive Healthcare
In the US, healthcare costs have been rising faster than general inflation for decades and don’t seem to be slowing down any time soon. For middle-class families, especially those who don’t have good health plans through their jobs, the dream of full healthcare coverage is getting harder and harder to reach.
Employer-Sponsored Health Plans
The Milliman Medical Index (MMI) says that in 2024, the cost of health care for a family of four with an employer-sponsored plan will hit $32,066. For both employers and workers, this big cost shows how hard it is to keep healthcare costs under control.
Private Health Insurance
The cost of private health insurance in the US is projected to reach all-time highs. Value Penguin says that the average cost of private health insurance for a person in 2024 will be $584 per month, or $7,008 per year. Understanding and planning for healthcare costs is even more important now that this huge financial load is clear.
Healthcare Insurance Premium Increases: A Historical Perspective
Since 2008, the landscape of healthcare insurance premiums has changed dramatically, with costs rising at a rate that far outpaces wage growth. Here’s a closer look at the trends and projections:
- 2008 to 2018: Average family premiums for employer-sponsored health insurance increased by 55%, significantly outstripping the growth in wages.
- During the same period, employee premium contributions for single and family plans grew at an average annual rate exceeding 4%.
- From December 2005 to December 2022, the implied total-premium index surged by 77.9%, reflecting an average annual increase of 3.4%.
- In 2020, the average health insurance premium for single coverage was $7,149, marking a 2.5% increase from the previous year. This was notably lower than the average annual growth rate of 4.2% for single premiums between 2008 and 2020.
- In 2023, the average per-employee cost of employer-sponsored health insurance rose by 5.2%, reaching $15,797. Employers are bracing for another significant rise in 2024.
- Small employers have been hit even harder, facing a 7% increase in costs.
It’s important for both employers and workers to understand these trends as they try to figure out how to pay for healthcare. You can better plan for how health insurance will affect your finances in the future if you stay aware.
In 2023, the prices of prescription drugs have gone up by an impressive 8.4%, which has a big effect on the total costs of health benefits. There’s more to this rise than just a number; it’s part of a bigger trend that’s changing the way healthcare is provided.
Education Inflation: College Becoming Out of Reach
Higher schooling has been seen as a way to get ahead in life and keep your job for a long time. In the United States, the cost of college has been growing at an alarming rate that is much faster than inflation and wage growth.
The College Board says that for the 2023–2024 school year, the average advertised tuition and fees for a private four-year college went through the roof, reaching $41,540. The overall cost of going to college often goes over $60,420 per year when you add up room and board, books, and other costs.
Rising Costs of Public Universities
Even though public colleges are usually cheaper, their prices have gone up a lot recently. The average cost of tuition and fees at public four-year colleges for the 2023-2024 school year is $11,260. This is $270 more than the previous school year, or 2.5% more. If you are from outside the state, the average cost of tuition and fees at a public four-year college in 2023-2024 is $29,150.
Rising Student Loan Debt
The Department of Education says that the average government student loan debt was around $37,850 in March 2024. What an amazing amount! It really shows how much debt many kids have while they are in college.