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How’s the Average Worker Supposed to Get Ahead?

How’s the Average Worker Supposed to Get Ahead?

There’s been lots of reports lately saying the economy has picked up and unemployment has dropped significantly. So how come the average US worker is still just barely making ends meet? One theory is the high cost of health care.

A report by the Economic Policy Institute finds that, by many measures, the cost for care­­­ in the US far outstrips the cost for the same product or service in peer countries. EPI Research Director Josh Bivens, commenting on the latest findings, says, “We spend far more for the same—or worse—quality health care as our international peers, which has a tremendous impact on typical workers’ wages and their ability to secure healthcare on the job.”

The report features this startling statistic: The rising cost of health care has cost American workers almost $390 billion in potential wage increases since 1979. So what employers give in annual pay increases, the health care system taketh away, and then some.

Here are a couple of excepts from the report:

What this report finds: Rapid growth in the cost of U.S. health care has put sustained downward pressure on wages and incomes. This rapid growth of spending has not purchased notably high-quality care, however. U.S. spending on health care is higher than in peer countries, while quality is lower. These high costs cannot be attributed to overuse of health care in America; instead, it is clear that the high price of health care is the culprit. Prices for pharmaceuticals, physician salaries, and medical procedures are almost uniformly higher in the U.S. than in peer countries—sometimes staggeringly so.

Why it matters: Rising premiums, out-of-pocket costs, and public health spending are crowding out income gains and spending on other goods and services. Meanwhile, our health care system ranks low on measures of equity and quality relative to peer countries. Recognizing the role of health care prices in driving health spending is crucial: Efforts to contain costs by controlling use are not only economically inefficient but also dangerous—leading to decreases in medically indicated and preventive care that would improve health outcomes for Americans and that is more cost efficient in the long run.