NCPA - National Center for Policy Analysis

UNIVERSITY OF MONTANA/NATIONAL BUREAU OF ECONOMIC RESEARCH/THE MISSOULIAN

June 19, 2007

Most of us are aware that the costs of health care have exploded in recent years and the burden imposed upon businesses, governments and individuals has been more than some can bear.  What is less obvious is health care costs are a killer of jobs and income, says Patrick Barkey, director of health care research at the Bureau of Business and Economic Research at the University of Montana. 

According to the National Bureau of Economic Research:

  • Every 10 percent rise in health insurance premiums makes it 1.6 percent less likely that one will find a job and 3.8 percent less likely that that job will provide health benefits.
  • That same 10 percent rise in premiums also produces a 2.3 percent decline in wages, and a 1 percent reduction in hours.

These findings put the often shrill insistence that the U.S. economic recovery has failed to create enough new jobs in perspective.  In an environment where health insurance premiums have increased by 59 percent since 2000, can we really expect employers to open the job-hiring spigot and increase their exposure?

It's amazing that nearly $3 trillion of health-care goods and services are ordered off a menu that has no prices on it, says Barkey.  Until we stop running around trying to get someone else to pay for the health care that we consume and accept the sometimes harsh discipline that the price system imposes on every other part of the economy, it's hard to see anything changing soon.

Source: Patrick Barkey, "Health care menu prices continue to overwhelm us," The Missoulian, June 19, 2007.

 

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