The health benefits that cut your pay

My new employee thinks that she is paying roughly $2,600 for health care in her first year on the job — her $500 deductible plus her $2,100 share of the company’s health insurance premiums. In fact, she’s paying more than $10,000 into the country’s health care system. As her employer, our company will pay $6,190 of her health care costs, money that might otherwise go to her in salary. (From my point of view as a chief executive of a company, health care is just a different form of compensation.) She is also paying more than $1,500 in federal and state taxes to finance Medicare and Medicaid.

Clearly, personal health insurance is not the only way our employees pay into our health care system. There is the 1.45 percent of every paycheck that goes to Medicare, as well as the portion matched by the employer. Furthermore, a large slice of her general taxes are, in fact, health care costs: roughly 20 percent of federal spending and 10 percent of state spending support Medicare and Medicaid. She must pay for all of this…

For employees like her, however, the greatest impact of exploding health care costs will arrive in the form of stagnating wages. Before the Affordable Care Act became law, President Obama’s Council of Economic Advisers warned that its projections to 2040 showed that “essentially all of the rise in average compensation due to increasing productivity over time would go to health insurance, and essentially none would go to take-home wages.”

This year, a standard deductible family policy for our company will carry premiums of roughly $23,000.