Study: Rising Health Care Costs Eat Up Wage Gains
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American workers can expect to pay more out of their paycheck to cover health care costs due to the new health care law and rising health care costs overall, according to a new independent study released by the Coalition for Affordable Health Coverage (CAHC) at July 12 event hosted by the U.S. Chamber and CAHC.
“If we don’t get health care costs under control, our economic recovery will be further stalled,” said Bruce Josten, executive vice president for Government Affairs for the U.S. Chamber. “The escalating cost of health care is a primary contributor to our debt and deficit problem. Unless we find a way to curtail rising health care costs, we face an ever widening sea of red ink in which the economy will drown. If we do not reform our health care entitlements, there is little hope that we can restore our nation’s finances.”
The CAHC-released study, Treating Our Ills and Killing Our Prospects, shows how rising health care costs will erode worker take home pay unless cost-cutting reforms are implemented. The added cost of benefits alone could absorb half of a worker’s productivity rewards between now and 2030, according to the study.
“This study underscores the fact that if health care costs continue to rise, we will have less individual prosperity,” CAHC Executive Director Joel White said.
According to the study, if health benefit costs continue to grow at recent rates, they will consume between one-third and 40% of added compensation for the bottom half of wage earners from 2009 and 2015, and more than half of compensation gains for that category of workers from 2015 to 2030. For the bottom 30% of wage earners, rising health insurance premiums could consume 100% of wage gains between now and 2015 and a eat up a significant majority of wage gains for workers in the 50th percentile.
House Majority Leader Eric Cantor (R-VA) was candid about how to curtail rising costs. “We must repeal Obamacare,” he said during a luncheon keynote address at the Chamber event. “There is no improving a flawed product. We will see costs skyrocket, and rationing will undoubtedly occur.”
The Chamber event, “Controlling Costs: The Price of Good Health,” featured leading health care economists and government officials, including President Obama’s Deputy Chief of Staff Nancy-Ann DeParle and Congressional Budget Office Director Douglas Elmendorf. Small business owners joined lawmakers and policy experts to discuss the causes and dangers of runaway cost growth and strategies to address the challenge.
The Chamber is working to lessen the burden of the new health care law while promoting strategies and solutions to help businesses get costs under control, improve quality, and increase coverage. A few suggestions Josten recommended:
- Promote health information technology (HIT)--Widespread adoption of HIT—including electronic prescriptions and medical records—will improve quality, lower costs, and reduce medical errors.
- Enact meaningful medical liability reform--The Chamber supports health courts, caps on punitive damages, and other medical liability reforms that would ensure fair damage awards, eliminate frivolous lawsuits, and lower costs.
- Reform insurance plans to pay for quality, not quantity--Congress should make it easier for employers and insurers to create insurance plans that pay for quality, not quantity, and reward doctors for keeping patients healthy.
- Rein in Medicare and Medicaid fraud and abuse--Medicare and Medicaid fraud is running rampant and costing taxpayers tens of billions of dollars every year. A broad array of countermeasures should be enacted immediately.