The medical bill you need to see.

[sinkingfeeling]

http://www.washingtonpost.com/wp-dyn/content/article/2009/12/07/AR2009120702947.html

The reason is not that people haven't heard grim warnings about the future. It's because they don't understand what's going on in the present. In 2009, the average employer-sponsored health-care plan cost a bit less than $13,500. But virtually no one cut a check for $13,500. Employers generally pay more than 70 percent of their employees' health-care costs. To employees, that seems like a good deal, particularly given how fast costs are growing. A "benefit," as it's called.

But health-care coverage is not a benefit. It's a wage deduction. When premium costs go up, wages go down. When premium costs go down, wages go up. Yet workers don't know that. In fact, the information is hidden from them. That means that cost control seems like all pain and no gain, which makes it virtually impossible for Congress to pass. It's like asking someone to diet when they don't realize it will help them lose weight.

Cost control is not, in fact, all pain and no gain. It's some pain in return for a fat raise. A 2006 study, for instance, by Harvard's Katherine Baicker and Amitabh Chandra used malpractice payments to estimate the effect of premium increases on wages. They found that a 10 percent increase in health-care premiums "results in an offsetting decrease in wages of 2.3 percent" and an increase in unemployment of 1.2 percentage points. Compensation is basically a set sum for employers, and they don't seem to care much whether it goes into wages or into health-care costs.

From 1989 to 1995, median wages actually fell a bit. Then, managed care kicked in. Annual growth in health-care costs fell from more than 10 percent in the early 1990s to less than 5 percent in the late '90s. Meanwhile, wages shot through the roof, rising more than 11 percent from 1995 to 2000. Then we ended the managed-care experiment, and health-care costs resumed their normal speed of growth. Predictably, wages slumped back down from 2000 to 2006. "By every observable indicator," says Harvard's David Cutler, "managed care was a huge success. It cut spending, cut the growth of spending and didn't seem to kill anyone. And yet everyone hated it."

[napi21]

1. I'm not sure I buy that deduction. From 1995 to 2000, the

economy was booming! Remember the dot com bubble? I don't dispute that there's a link to wages/HC costs and the total cost per employee, but trying to use those years as an example is not the right example to use.

[Aragorn]

2. there is little truth in this

1) Managed care did hurt people. Denial of care, increased costs often needed simply to get to in-panel providers, 2) It did lower the rate of HC spending increases, but 3) this was only ever gonna be temoroary, and 4) it increased OOP costs for almost everyone, shifting costs more onto employees than alternatives such as non-profit single payer.

[bluescribbler]

3. Health care coverage has always been a wage cut.

That was its raison d'etre from the beginning. During WWII, President Roosevelt imposed a wage freeze to try to hold the line on war spending. Employers feared that their workers would go elsewhere, so they persuaded FDR and the Congress to give them a tax deduction if they bought health coverage for their employees.