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Study: Health Insurance Costs Keep Salaries Down

A new study suggests that rising health care costs may be a driving factor in wage stagnation.

According to the study's authors, rising health care costs and stagnant wages have been a major concern for the past decade, but there has been little talk of the connection between the two problems. To trace the connection, Human Capital Management Services (HCMS), a health care analytics firm, surveyed the compensation packages of nearly four million Americans.

“Health care costs are siphoning money out of employees' wages, and people on the lower end of the totem pole suffer the most,” Hank Gardner, the CEO of HCMS, told the Fiscal Times.

According to the study, overall wages rose by 4.1 percent in 2014, while health care costs rose more than 10 percent. The divide was even greater for workers making less than $30,000, whose wages rose by only 0.5 percent. Workers making more than $80,000 a year saw the lowest percentage rise in healthcare costs.

HCMS says the main culprit behind rising healthcare costs is waste, which the group claims accounts for around a third of health care spending. Healthcare waste includes unnecessary medications and procedures that are either over-prescribed by doctors or requested too often by patients.

“The key to resolving wage stagnation is to reduce healthcare waste and funnel those dollars into wages,” says Gardner, who blames government program inefficiencies and large insurance companies for the bloated spending, according to the Fiscal Times.

A 2015 study by the Kaiser Family Foundation (KFF) also examined the discrepancy between wages and health care costs. According to the study,  health insurance deductibles have risen around 7 times faster than wages since 2010, making health care much less affordable, even for families with employer-provided insurance.

Sources: HCMS, Fiscal Times, KFF / Photo credit: MrTMan/​Flickr

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