Rising health costs disproportionately affects low-income workers

Oct 7, 2014 | Healthcare Industry News

Rising health care costs are a national concern, drawing attention from both sides of the aisle as well as throughout the economic spectrum. However, a recent Kaiser Family Foundation survey has found that that health care cost inflation does not affect all Americans equally. In fact, the Wall Street Journal goes as far as to call health care costs "the biggest driver of income inequality in America today."

According to the Kaiser Family Foundation survey results, health insurance premiums rose 3 percent in 2013. While this may seem to be a modest increase, what was even more diminutive was the growth of annual wages, which grew only 2.3 percent. 

Because the majority of employers compensate their employees with a combination of wages and benefits, when health care costs rise, organizations are often forced to hold back on salary increases. However, the Wall Street Journal's analysis of federal data and health insurance provider data clearly illustrates that not all employees are equally affected. 

The source noted that an average policy costs costs employers nearly $12,000 per year, considerably higher than the $4,200 cost in 1999. If premiums had not increased so dramatically, today's average salary would be approximately $7,800 higher.

For those that make $250,000 a year, this represents only a 3.1 increase. However, for an employee that makes $30,000 today, this would represent a 26 percent salary increase. 

It is also worth noting that total pay and benefits for low-income workers rose by 41 percent from 1999 through 2006. But actual wages only increased by 28 percent, barely above inflation. This is because employer health insurance costs have doubled during the same time, from 6.5 percent to over 12 percent of total compensation. 

In addition, out-of-pocket costs have also risen, meaning employees are increasingly responsible for the up-front costs of care. With wages remaining stagnant, this can cause significant problems for health insurance claims management professionals. 

Fortunately, care facilities can combat the issues caused by bad debt by making the decision to outsource receivables management