What Keeps Your Wages Down? Healthcare Costs, Says HCMS Group

Friday, May 6, 2016 General News J E 4
National study shows that reducing healthcare waste could free up funds for bigger paychecks.

CHEYENNE, Wyo., May 6, 2016 /PRNewswire/ -- There's one way to help spur wage growth that nobody's talking about.

How? By reducing the amount spent on healthcare waste and slowing the increase in health benefit costs, according to a new national study by HCMS Group, a healthcare reform company. Healthcare waste is overtreatment by medical providers and overconsumption by patients, with risky narcotics at the top of the list. Waste accounts for 30% of national healthcare spending.

In 2014, healthcare costs rose more than 10% for a cross-section of private employers and the people they cover, the study showed. But worker pay climbed just 4.1%. For those making less than $30,000 – predominantly women – wages inched up 0.5% while their healthcare costs jumped almost 17%.

The study spotlights one of the biggest but least discussed economic effects of runaway health benefit costs. As healthcare expenses drain more of employers' budgets, less money is available to put in people's paychecks. Flat wages widen economic inequality – one of the things fanning voter anger and frustration. The current benefits system encourages waste and does little to improve health.

"The key to resolving wage stagnation is to reduce healthcare waste and funnel those dollars into wages," said Dr. Hank Gardner, the CEO of HCMS Group.

Nationally, wage gains have barely kept up with inflation. The HCMS study was based on the company's unmatched Research Reference Database, which includes healthcare, compensation and paid time off data for almost 4 million Americans whose benefits are provided by more than 300 employers.

In 2014, average wages in the healthcare costs study group of more than 140,000 rose 4.1% to $81,371. Average health plan costs – including those paid by employers and directly out of employees' pockets – jumped 10% to $10,263 a person. Among people earning less than $30,000, wages increased $124, or 0.5%, while their health plan costs surged $797, or 16.6%.

"This shows the power and importance of real healthcare reform," Gardner said. "We need to put more money in people's pockets. People with the lowest incomes – notably women and single mothers – wind up paying the most for healthcare waste in the form of forgone wages."

For more about the study: To learn about HCMS Group's healthcare reform solutions:  


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