How Health Care Stole Your Pay Raise

This amazing graph bouncing around the web is the most striking example of why health care reform isn’t just about reforming care. It’s about reforming the economy. New bumper sticker: “Reform Health Care; Get a Raise!”

In layman’s terms, the hard blue line is the expected growth in average wages. The dashed-purple line is what’s actually appearing in workers’ wallets, which is average wages minus health premiums. In other words, health care is robbing you of your bonus.

So why aren’t workers rallying in the streets for health care reform? They don’t see this graph. Instead, as Ezra points out, they see their wages stagnating and chalk it up to a stagnant economy, a stagnant company, or a stingy boss.

But this is exactly why it’s a bit cheeky to present graphs like this (via Greg Mankiw) as evidence that Americans are inherently reluctant to pay for health reform.

So long as this issue is presented as “Pay for health care reform” vs. “Don’t pay for the status quo,” we’re skirting the main issue here. We are paying for the status quo. Every year, in our paychecks alone we are paying for the cost of doing nothing, to the tune of about $5,000 per worker per year. How about a poll that presents the first graph and asks respondents: “This is what will happen to your wages, and the wages of your children, as health premiums continue their predicted climb. Is that a system to you want to preserve? Please answer yes, no or unsure.”

Comments (21) …

John R. Graham June 3, 2009 4:56 PM

John Thacker points out that charts like this have been floating around libertarian/conservative circles for years. However, I disagree that the purpose is to indicate that everything is fine the way it is. The purpose is to support the case for tax reform (like Sen. McCain proposed) to give those health-care dollars back to the workers who earned them, so that we have more choice in health benefits.

President Obama’s “reform” is likely to do the opposite: put even more of our health-care dollars under government and corporate control.

Professor Mankiw’s survey is misleading only to the degree that it assumes that there is some level of taxation that would enable the government to provide (meaningful) health insurance to everyone. In Canada, everyone has “health insurance” but about 15% of the population doesn’t even have primary care according the College of Family Physicians of Canada. (They gave up on high-tech care years ago, after the Fraser Institute had continuously embarrassed the government with its annual surveys of waiting lists for specialist care.)

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

Scroll to Top