WCI, Inc
Jan. 22, 2024

Unequal healthcare costs

The increasing cost of employer-sponsored health insurance has been linked with decreased earnings and increased income inequality, including by race and ethnicity, according to recent research published in JAMA Network Open. The study, which was conducted by researchers from the Friedman School of Nutrition Science and Policy at Tufts University, noted that the cost of employer-sponsored health care benefits has increased faster than workers’ wages for several decades, with important implications for disparities in earnings and wage stagnation.

The study found that the mean cumulative lost earnings from 1988 to 2019 associated with growth in health insurance premiums was $125,340 per family (in 2019 dollars) or nearly 5 percent of total earnings over the 32-year period. In all 32 years of the study, health care premiums as a percentage of compensation were significantly higher for non-Hispanic black and Hispanic families than for non-Hispanic white families. By 2019, 13.8 percent of compensation among non-Hispanic white families with ESI went to premium costs, compared with 19.2 percent among non-Hispanic black families and 19.8 percent among Hispanic families with ESI.

Lower-wage workers also were impacted by this disparity. In 2019, health care premiums as percentage of compensation represented 28.5 percent of compensation for families in the 20th percentile of earnings, compared with only 3.9 percent for families in the 95th percentile.

“This economic evaluation of U.S. families with ESI suggests that increasing health care premiums were associated with decreased annual earnings and increased earnings inequality, including by race and ethnicity and wage level, and were also associated with reduced median cumulative family earnings by approximately $125,000 over 32 years,” the report concluded. “Our results depict the hidden costs of increasing health insurance premiums for the U.S. worker: less opportunity for wage growth and a heavier burden of health insurance premiums on lower-paid workers and on Black and Hispanic workers.”

[According to WCI, part of the problem is the high cost of healthcare. WCI Employer's Choice (our in-house agency) offers group healthcare plans for both small and large employers with proven cost savings that could help your company solve this disparity.]

SOURCE: Employer-Sponsored Health Insurance Premium Cost Growth and Its Association With Earnings Inequality Among US Families, JAMA Network Open, January 16, 2024.

From WCI's HR Answers Now ©2024 CCH Incorporated and its affiliates. All rights reserved.

One Town Square Blvd, Suite 100, Asheville, NC 28803 +1 (800) 621-2685 [email protected]