Fix Health Care Policy

Urban Institute Claims Wages and Other Benefits to Be Reduced Under Obamacare

Recent analysis by the Urban Institute says that Obamacare has “a negligible impact on total employer-sponsored coverage and its costs.” But a closer look at the results of the study uncovers some other important points:

• Two-thirds of employees observe decreases in wages while their employers deal with increasing costs. The Urban Institute claims that mid-size firms will see spending per person increase by 4.6 percent, while large firms will see spending increases by 0.3 percent per person. According to the U.S. Census, this accounts for 65.1 percent of employees—or roughly 79 million—in the U.S. who are employed by medium- or large-size firms. The study suggests: “Any increase in employers’ health-related costs will be offset by decreases in other compensation—whether wages or other benefits.” This means that individuals in mid- and large-size firms will receive less in take-home wages (or other benefits) and pay a greater proportion of their compensation to health care due to Obamacare.
• The study does not take into account a “wage floor.” The study assumes that adjustments to compensation can occur in benefits and wages for all workers, but there are instances where, if wages and benefits are already low, they could not be lowered any further to pay for increases in health care costs. We already observe service industries trying new methods through moving workers from full- to part-time employment in order to avoid increased Obamacare costs.

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Tags: costs, employer impact, ObamaCare, premiums, study, Urban Institute, wage floor