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Health Reform – What If They Do It Wrong

Editor’s note: Health reform brings to mind the following phrase: We are betting the farm on it.

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While supporters of the proposals are hoping that modernization and reorganization of the payment system will reduce the cost of reform, those savings are mostly speculative. In the event they don’t materialize, much of the 10-year $1 trillion to $1.5 trillion price tag could ultimately be financed through new charges against employer-sponsored health plans over the coming decade. What are the implications for workers of potentially higher health benefit costs for employers, and how do those implications vary over the earnings spectrum? These questions are too important to leave unexplored as the health care reform discussion evolves.

During the 2000s, the health and pension cost share of compensation rose, which drove down cash wages. In 1980, a median-wage, full-time worker’s health benefit costs were roughly 4.6 percent of compensation. By 2007, health benefits constituted more than 10 percent of the worker’s compensation. Benefit costs, already painfully high, could soar even higher under reforms that expand coverage and stimulate utilization but fail to rein in health cost inflation. A 1-percentage-point increase in health costs today erodes pay roughly 2.25 times faster than it did 25 to 30 years ago.

Read the whole story and the analysis

http://www.watsonwyatt.com/us/pubs/insider/showarticle.asp?ArticleID=22386

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October 8, 2009 - Posted by | Federal Government, healthcare | , , , ,

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