NCPA - National Center for Policy Analysis

Health Care Misery Index

December 1, 2003

One way for Americans to judge more easily the effectiveness of the new legislation, and of our health care system as a whole, is to adapt a leading tool of political economics: the misery index.

The health misery index consists of the percentage of Americans without health insurance and the percentage by which annual increases in medical costs have exceeded general price inflation, added together. Based on more than 40 years worth of data, the index shows:

  • In the early 1960s the index number was above 35.
  • From the mid-60s through the 1970s the index consistently declined, as Medicare and Medicaid covered seniors and the poor, and the percentage of Americans with private insurance rose (partly due to "experience rating" that allowed companies to offer consumers lower premiums than Blue Cross).
  • The misery index number was lowest in 1979, at 5.6.
  • It bumped up in the 1980s, as the Reagan tax cuts made health insurance less attractive to employees as an employer-provided, tax-exempt benefit.
  • Since 1988 the index has ranged from 15 percent to 19 percent annually.
  • In 2002 the index stood at 17.9 percent, less than half of the misery observed in 1960.

Critics of the system often imply that we were better off 40 years ago because medical spending was the equivalent of only about 5 percent of the gross domestic product, whereas today it is some 14 percent. Health care has gotten more expensive, but more people are insured today and those insured have more comprehensive coverage.

Health insurance can be more accessible without significantly fueling medical price inflation by offering people and families without employer-sponsored insurance a tax credit for purchasing private health insurance.

Source: Rexford E. Santerre (Center for Health Care and Insurance Studies, University of Connecticut School of Business), "The State of Health Care, in One Easy Number," New York Times, December 1, 2003.


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