Health Care Crowds Out Other Worker Compensation

Today’s Labor Day Managing Health Care Cost Indicator is 170%

I show this slide a lot; it's from the Kaiser Family Foundation, and shows how the cost of health care premiums have increased more dramatically than either overall inflation or worker income.  I point out that worker productivity has increased.  The increased value of labor, though, has been largely absorbed by the increased cost of health care. Hence, most people don’t feel like they have improved their income much or even at all over the last few decades-- and they're right 

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My colleague Steve Nyce has coauthored a white paper “Treating our Ills and Killing our Prospects,” highlighting research he has done into the broader social consequences of the high rate of inflation in health care costs.

One of the interesting analyses he has performed is to show how the increased cost of health care differentially affects those in the lower earning deciles.  Essentially, the high trend rate of health care costs eats up only a small portion of income for high income workers, while the high trend rate sometimes accounts for more than 100% of gain in compensation for low-wage workers.   In fact, the projections of health care cost increase suggest that health care will account for 170% of potential compensation increases for those with the lowest 10% of income from 2009-2030!

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Rapidly escalating health care premium costs contribute to the increasing disparity between rich and poor.