Thursday, January 19, 2012

Healthcare costs have been the enemy of the "Middle Class" for the last decade. Nice explanation and chart here...

A workers income comes in two forms: Wage and Non-Wage compensation. "Wage compensation" is what you are paid per hour or in salary (before any deductions). "Non-wage compensation" is what your employer might pay on your behalf in addition to what they pay you, such their half of the Social Security and Medicare tax, unemployment tax, retirment plans, etc.

Healthcare premiums/costs is another one and one that is rising much more than any other cost of employing a worker.  The employer share of your healthcare costs ARE a cost of employing you.  The more they have to pay for healthcare coverage (Non-Wage compensation) , the less available to pay you (Wage compensation). 

While income for the median wage earner has risen very modestly, it COULD have risen more if in the last decade healthcare costs had risen at only the rate of everything else in the Consumer Price Index. 

A significant source of Middle Class income stagnation, would you say? Healthcare costs are the (or one of) enemy of the middle class. Seems quite clear to me...The following is from economist Tim Taylor...
'''To paint an accurate picture of how health care cost growth is affecting the finances of a typical American family, RAND Health researchers combined data from multiple sources to depict the effects of rising health care costs on a median income married couple with two children covered by employer-sponsored insurance. The analysis compared the family’s health care cost burden in 1999 with that incurred in 2009. The take-away message: Although family income grew throughout the decade, the financial benefits that the family might have realized were largely consumed by health care cost growth, leaving them with only $95 more per month than in 1999. Had health care costs tracked the rise in the Consumer Price Index, rather than outpacing it, an average American family would have had an additional $450 per month—more than $5,000 per year—to spend on other priorities."
Here are the calculations for that median family. The row showing "Taxes devoted to health care" is the cost of Medicare, Medicaid, and other public health programs.''
Note: These are MONTHLY COSTS!
Source: Tim Taylor
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