For many American workers, health care costs have become a significant pocketbook issue. The fabrication of resounding wage growth is instantly reduced to a whisper with the rise in employee health premiums. This situation is hemorrhaging the take-home pay of workers and compelling ripples throughout the U.S. economy.
According to a recent economic analysis, health insurance premiums have outpaced wage growth in the past decade. The analysis, performed by The Commonwealth Fund, compared data from the federal Department of Labor and the Kaiser Family Foundation and examined the period from 2008 to 2018. Boston University Economist, Dr. Sandro Galea, observes, “Healthcare costs in the U.S. are exorbitantly high and are rising faster than wages”.
In 2018 alone, the report notes, the average health premiums paid by workers and their employers rose 4.4%, outpacing the average wage growth rate of 3.2%. Concurrently, deductibles – the amount workers must pay for healthcare services before insurance kicks in – rose to an alarming 6.6%. For most workers, this demonstrates a double hit on their wallets.
Johns Hopkins Health Policy Expert, Dr. Gerard Anderson, explains that the increases in health insurance premiums and deductibles are a direct line to the rising cost of medical care. “Hospital and drug prices are the main drivers of these increases,” said Anderson. “Unless we confront these price increases head-on, health premiums will continue to eat into wages.”
However, the impact does not stop at wage erosion. Higher health premiums, majority of which are deducted before a worker sees their check, decrease the amount of discretionary income available. Less discretionary income translates into decreased consumer spending, a vital component of U.S. economic growth. The home and auto industries are particularly impacted by this issue due to the high price of home and car ownership.
Moreover, high health insurance premiums place immense financial stress on small businesses struggling to provide benefits to employees. “Small businesses are the backbone of the U.S. economy. If we do not find a way to make healthcare more affordable for them, we risk destabilising our economy,” warns, Dr. Sherry Glied, Dean of the Wagner Graduate School of Public Service at New York University.
The issue of skyrocketing health care costs is not lost on public officials either. Politicians from both sides of the aisle have increasingly focused their attention to this issue, culminating in a variety of proposals aiming to curb the cost of healthcare. While a national consensus is yet to be reached, it is evident that the topic remains a pressing concern and could be a defining factor in forthcoming elections.
The new administration, under President Biden, has pledged to expand the Affordable Care Act to ease the healthcare cost burden on Americans. While it remains to be seen if these measures will effectively mitigate the impact of rising premiums effectively, the recognition of the issue at the highest level of government brings certain hope.
However, as American workers continue to grapple with this monetary tug-of-war, it’s clear that a solution can’t come soon enough. The relentless rise of health insurance premiums has become a silent thief, surreptitiously stripping workers of their hard-earned wages. Advancing past conversations and effectively addressing the root causes driving health care costs will not only safeguard health, but also secure one of the critical pillars of the U.S. economy: the American worker’s paycheck.
Original Source: https://hrexecutive.com/rising-health-premiums-are-eating-into-worker-paychecks/
