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Tuesday, March 24, 2009

Health Premiums Up, Wages Stagnate -- Connection?

President Obama has referred to health care costs as the "greatest threat to America's fiscal health." His blogging OMB director Peter Orszag has consistently said, "Health care is the key to our fiscal future."

What are they talking about? Consider this: a new study by the Robert Wood Johnson Foundation found that "Workers' insurance costs have risen far faster than incomes." From 1996 to 2006, the amount employees paid for individual health policies rose 79%, while their wages only rose 10%. Employers are paying higher premiums, too, so all sorts of money that could have been going to wages has been eaten up by health insurance.

If wages have grown so slowly, how were we to sustain economic growth? Well, six million working adults made up the difference in their household budgets by losing their health coverage. (In South Dakota, over 54,000 workers have no health insurance.) Everybody else borrowed like crazy... and we've seen how well that works as a basis for a growing economy.

South Dakota has perhaps been able to muster better relative economic growth because, even though our wages have grown more slowly than the national rate, our workers and employers have seen much slower premium increases (31.2% for individual policies and 25% for family policies from 2000 to 2006). Still, even in South Dakota, health premiums sopping up more buying power at three to four times the rate that wages are growing puts a drag on what people could be buying at the lumberyard.

The point: this decreased buying power is killing the economy. If we want people buying stuff downtown, if we want working families who can support healthy economic growth without going to the poor house when the kids need an operation, we need health care reform that cuts costs for everyone while guaranteeing universal coverage.

Unfortunately, the best way to do that—single-payer not-for-profit health coverage—is the one plan President Obama has taken off the table. Nuts.

Perhaps the President Obama should note this finding from the Robert Wood Johnson report: the only group with more insured folks than in the 1990s is children, thanks to (snarky trumpets, please) America's successful socialized health coverage, also known as Medicaid and the Children's Health Insurance Program.

Read the full RWJF study (in PDF format) here.


  1. A national plan is necessary. It is a huge impediment to starting a small business and attracting employees because of cost and availability. It gives a competitive advantage to big business and stifles smaller ones. I'll bet larger business don't mind because it creates dependence.

  2. The greatest threat to our fiscal future is really Obama nad the libs who are spending us into oblivion. They are truly making use of Rahm Immanuel's slogan, "never let a crisis go to waste." They are using this crisis to increase spending, advance their social agenda and thereby hugely increase our debt, and make us dependent on foreign nations money-wise. If you think we are dependent on foreign nations for energy, you ain't seen nothin' yet when comparing that with our dependence on them financial wise. What happens when China doesn't want to buy our debt, or wants to return it, or wants to change our currency? This is more scary than OPEC.


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