The Health Insurance Hurdle
According to Arnold Kling at Econolog, it explains why some people don’t have a job:
Health care now approaches 20 percent of the economy. With health insurance included in compensation, that means that 20 percent of compensation is determined not by your skill level, but by the median cost of health insurance. If the value of your skills has not been rising faster than the median, then maybe that is not a problem. However, if the value of your skills has been rising more slowly than the median, then your skill level is no longer enough to overcome the health insurance hurdle.
What Arnold doesn’t say is that this problem is going to continue and get much worse under ObamaCare.
Good post. Most people don’t understand this. including most employers.
I agree with Paul. This is Econmics 101, but almost all noneconomists, including most employers and employees do not seem to understand it.
Employer medical expenses are running twice that for saving and retirement.
Obama’s subsidies will make the higher prices more affordable, thus increasing premiums.
Don Levit
I don’t think there’s a single person in the country with a functioning intellect that doesn’t know health care costs have outpaced both inflation and economic growth for the past several decades. What’s not understood is how bad it actually is. While real wages for the past decade have been down to flat, employment costs have significantly increased. All those increased employment costs have been increases in health care costs. The health care bill claims it can make some inroads in those cost increases, history will prove that true or false. It undisputable that without the bill the health care industry will continue to drain any hope for a better standard of living for anyone but the various medical specialists who make some 10 to 20 times the median household income.
artk: Come on! “It undisputable that without the bill the health care industry will continue to drain any hope for a better standard of living for anyone…”
First of all, indisputable according to whom? You? There are a lot of people that think that increased medical spending actually contributes to a better standard of living.
Furthermore, you can’t assume that health expenses will continue to grow indefinitely. If you project current growth rates into the future, eventually we’re spending our entire GDP on health care. That’s never going to happen.
What will likely happen is that the growing costs (which will almost certainly not be a miracle pill for the industry)will force us to reinvent the wheel for health care delivery.
While Kling’s writing is a fairly straightforward analysis of the job market and growth in costs, I don’t see the need to insult him. It’s not like Gawande’s New Yorker article was anything new. But I didn’t see you comment that anyone with a functioning intellect knows that end of life costs are unnecessarily high due to irrational hopes for a miracle cure.
I’m a huge fan of Arnold Kling, but I don’t quite buy this argument. Until 2014, employers in most states outside Massachusetts or Hawaii do not have to offer health benefits.
Health benefits are “all or nothing” offerings to full-time employees (i.e. if employer offers benefits to a class of employee he must offer it to all employees in that class), but employers can incorporate tactically so that the low earners are in a firm with no benefits. Many low-income workers have no health benefits.
I think the old observation that unskilled labor is performed in Asia is a more significant factor in unemployment of low-skilled persons in the U.S.
Not so John, there’s a new Seattle area company called LyfeBank which collects employer(s) funds and directs them to employee-owned LyfeVault accounts, even for part-timers. Employees can use their accumulated account funds to purchase an individual or family insurance policy of their choice, and pay for other qualified medical expenses with their LyfeVault Visa debit card. All with pretax dollars and completely portable.
This model could easily replace the current employer/insurer model and help many.
Another main reason why customers trust Vimax Pills is because of an easy and fair billing practice. While some other companies will take your credit card and continue charging you month after month, hoping you will not notice those charges.