A comprehensive JAMA study analyzing 32 years of data suggests that health premiums for employer-sponsored health benefits have been rising faster than wages. These costs are often passed on to employees, further reducing or stagnating wages and increasing income disparities by race, ethnicity, and wage level.
According to JAMA, “Since the 1980s, real wages have increased among the highest earners but have been flat for most workers, leading to a widening earnings inequality. During the same period, the costs of employer-paid health care benefits have also increased substantially. As health economists demonstrate, it is generally accepted that increasing health care premiums result in lower wages for employees.”
Additionally, health care premiums as a percentage of compensation were significantly higher for Asian, Black, and Hispanic families than for White families.
The study also notes that “most employers do not adjust the health care premiums charged to workers by employee earnings; thus, the displacement of wages owing to increasing health care premiums could be particularly problematic for lower-wage workers and could be associated with earnings inequality.”
Improve Real Wages and Equity by Halting Healthcare Overspending
Instead of perpetuating this damaging dynamic, forward-thinking employers have the power to fix the healthcare cost drain on their employees’ wages. With a modern health plan that reduces overspending by 30% while improving member support, Vitori employers can use these substantial savings to lower health plan premiums and implement more equitable wage-banded premiums. They can also fund competitive benefit and business enhancements to attract and retain talent.
