Economists Say Rising Healthcare Costs Could Lead to Job Cuts

By Shalene Gupta, Fast Company (TNS)

It turns out rising healthcare prices have a hidden cost: jobs. A new working paper, titled “Who Pays for Rising Health Care Prices? Evidence from Hospital Mergers” and published by the National Bureau of Economic Research, examines the link between increasing healthcare costs and job cuts.

The paper was written by economists from Yale, the University of Chicago, the University of Wisconsin-Madison, Harvard University, the Internal Revenue Service (IRS), and the Department of the Treasury. The researchers found a 5% increase in healthcare costs is associated with 203 jobs eliminated, and $32 million in lost pay.

Not only are jobs lost, but tragically, one in 140 of the workers laid off after a healthcare cost increase ends up dying by suicide or a drug overdose.

The researchers analyzed data on hospital mergers and found that two years after a merger, healthcare prices go up by 1.2%. They also combined merger data with data from the Department of Labor on employer healthcare premiums and IRS data on income taxes from 2008 to 2017 to understand how increased healthcare costs move through the economy. They noted that when healthcare costs go up, health insurance premiums go up, and since employers cannot reduce wages, their only other choice is to cut jobs.

“Many think that it’s insurers or employers who bear the burden of rising health care prices. We show that it’s really the workers themselves who are impacted,” Zarek Brot-Goldberg, an assistant professor at the Harris School of Public Policy at the University of Chicago, said in a statement. “It’s vital to understand that rising health care prices aren’t just impacting patients. Rising prices are hurting the employment outcomes for workers who never went to the hospital.”

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