A groundbreaking new study reveals that increasing healthcare costs are causing widespread job losses and reduced wages across the United States, with middle and lower-income workers bearing the heaviest burden.
Research published by the National Bureau of Economic Research shows that when healthcare prices climb, employers outside the healthcare sector respond by cutting jobs and reducing payroll. The impact is substantial - just a 1% increase in healthcare prices reduces a county's aggregate income by approximately $8 million per year.
"When healthcare prices go up, jobs outside the healthcare sector go down," explains Yale economist Zack Cooper, who co-authored the study. The research demonstrates that rising medical costs are widening economic inequality as employers struggle to maintain health insurance coverage for their workforce.
The comprehensive study analyzed insurance claims data from roughly one-third of adults with employer-sponsored insurance, along with premium information and tax returns filed between 2008-2017. This allowed researchers to track how increased healthcare costs affect employment, income, and government revenue.
Hospital mergers emerged as a major factor driving price increases. Over 1,000 hospital mergers occurred between 2000-2020, with about 20% of these consolidations resulting in higher costs due to reduced competition. When hospitals merge and raise prices by 5%, the ripple effects are severe:
- $32 million in lost wages
- 203 eliminated jobs
- $6.8 million reduction in federal tax revenue
- Increased risk of death by suicide or overdose among displaced workers
The burden ultimately falls on workers rather than insurers or employers. "Many think that it's insurers or employers who bear the burden of rising healthcare prices. We show that it's really the workers themselves who are impacted," notes University of Chicago professor Zarek Brot-Goldberg.
The economic damage extends beyond direct job losses. When healthcare prices rise, companies reduce their workforce, leading to increased government spending on unemployment benefits while simultaneously decreasing tax revenue. This creates a negative spiral effect on the broader economy.
The findings underscore how the U.S. healthcare system's rising costs harm not just patients seeking care, but also workers who never set foot in a hospital. As healthcare prices continue climbing, the toll on employment and economic stability grows increasingly severe.