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Healthcare costs hurting workers

Posted By Barry Ritholtz On October 28, 2003 @ 7:00 am In Finance | Comments Disabled

Here’s the flip side of yesterday’s wage chart:

Workers’ share of health care costs are rising much faster than their wage increases; In 1998 Employees’ spent a little over $1,000 on health care: 9.6% of their salary on “out of pocket” expenses, while health care payroll deductions were 15.7% of their salary. Projected for 2004, those percentages are up sgnificantly – 12.8% and 19.5% respectively. That’s a 160% increase to $2,600 from net salary:

HealthCAREPinch.chart.jpgChart courtesy N.Y. Times [1]

Thus, any potential widespread economic gains from hourly wage improvements are more than offset by these expenses. Here’s a brief excerpt:

“As health care costs head into a fourth consecutive year of double-digit increases, employers are shifting a growing share of the burden onto people who make the heaviest use of medical services.

The trend — evident as companies begin informing workers of their benefit choices for the coming year — takes the form of fast-rising co-payments and deductibles, higher payroll deductions to cover spouses and children and new kinds of health plans that give workers a fixed sum to spend.

On average, the annual out-of-pocket costs for employees of large companies have more than doubled since 1998, to $2,126 this year, according to Hewitt Associates, a benefits consulting firm. Hewitt is expecting a 22 percent jump next year, to $2,595.

Costs are up sharply, too, for workers who pay a monthly insurance premium but rarely see a doctor. However, employers have sought to temper those increases, so healthy workers are not tempted to drop their coverage, experts say.

Employers still pay the bulk of their workers’ health care bills, but their contribution has slipped over the last five years, to 70 percent of total health care costs from 75 percent, according to Hewitt’s latest survey of 300 employers with 5,000 or more workers, released last week.

Source:
Workers Feel Pinch of Rising Health Costs [1]
By MILT FREUDENHEIM, October 22, 2003

http://www.nytimes.com/2003/10/22/business/22CARE.html


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[1] N.Y. Times: http://www.nytimes.com/2003/10/22/business/22CARE.html

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