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Rising Health Costs

August 25, 2009

Rising health care costs have slowed the growth of companies that subsidize employees’ insurance.


How health costs hurt business. I’m Bob Hirshon and this is Science Update.

Rising health care costs aren’t just hurting individuals. They’re also handicapping corporations that subsidize their workers’ health insurance. This according to a study of thirty-eight industries by the RAND Corporation. Senior economist Neeraj Sood says they tracked the companies’ job growth and productivity over a twenty-year period.

NEERAJ SOOD (The RAND Corporation):
Industries which provided insurance to a large fraction of their workers: those were exactly the industries which experienced slower growth at a time of rising health care costs.

That may sound like a no-brainer, but Sood says economic theory suggests they would simply offset spikes in health costs by skimping on salaries. He says divorcing health insurance from where we work could level the playing field for these businesses. I’m Bob Hirshon for AAAS, the Science Society.