A recent study published in JAMA Network Open suggests that families with workplace health insurance may have faced a cumulative earnings loss of $125,000 over the past thirty years due to the continuous surge in health insurance premiums. This sheds light on the pervasive impact of rising premiums on workers’ wages, even though employers typically bear the primary brunt of escalating health insurance costs.
The study underscores a significant concern, particularly as it reveals that low-income employees and individuals from marginalized communities bear the heaviest burden of this financial strain.
Premium Growth Outpacing Wage Growth
Over the years, the growth in health insurance premiums has consistently outpaced wage growth, resulting in health insurance occupying an increasingly substantial portion of workers’ overall compensation. Although employers are predominantly responsible for covering the escalating health insurance costs, the study suggests that workers indirectly experience the financial strain through suppressed wage growth.
Notably, the burden is more pronounced for low-income workers, a demographic that disproportionately includes people of color. Since health insurance premiums typically remain uniform regardless of income levels, they represent a more significant percentage of total compensation for low-income workers compared to their higher-income counterparts.
As of last year, the average cost of a workplace health plan for family coverage was $24,000, with employers covering approximately three-quarters of this expense, according to data from KFF.
The Escalating Impact on Workers
The study, analyzing data from 1988 to 2019, found a substantial increase in the proportion of compensation attributed to health care premiums. In 1988, health care premiums accounted for 7.9% of a worker’s total compensation, including wages and premiums. By 2019, this figure had surged to an average of 17.7%, reflecting a notable shift over the study period.
Further disparities were observed, with health care premiums consistently representing a larger percentage of compensation for Black and Hispanic families compared to their white counterparts with employer insurance. Notably, these disparities have intensified over time, according to the study’s authors.
Hidden Costs on Workers and Disparities Amplified
The study’s authors emphasize that the hidden costs of escalating health insurance premiums are evident in diminished opportunities for wage growth and an increased burden on lower-paid workers, particularly those from Black and Hispanic communities. The findings underscore the need for attention to the broader economic implications of rising health care expenses and advocate for solutions that address the disparities observed in the study.
