1. Hospital mergers could lead to job losses.
Hospital mergers led to inpatient and outpatient prices rising an average 1.2% in the two years after a transaction, based on data from 304 hospital mergers between 2010 and 2015. Approximately 40% of the hospitals involved in those 304 mergers raised prices by more than 5%.
An average hospital that raises prices by 5% following a merger would result in more than 200 healthcare and non-healthcare job losses, due to an employer's need to cut costs when premiums rise, the study said.
"A lot of what we talk about, when we talk about health spending, is out-of-pocket costs, and those are real," said Zack Cooper, associate professor of public health and economics at Yale University and an author of the study. "But I think in many ways the more subtle and potentially pernicious consequence of rising health spending is actually these labor market outcomes."
2. Employers trim payrolls when premium costs rise.
Many working-age adults are covered by employer-sponsored health plans. Workers likely are more willing to accept the cost burden from rising premiums if the quality of healthcare services and benefits is also rising, the study said. When quality doesn't increase, workers don't want to shoulder the cost burden, and employers turn to layoffs to trim expenses, rather than shifting those workers to high-deductible plans. As a result, a 1% increase in healthcare prices leads employers to reduce payroll by 0.4%, the study found.
3. Higher healthcare prices result in lower tax revenue.
A 1% increase in healthcare prices reduces federal income tax revenue by 0.4% as workers are laid off. Unemployment insurance payments rise by about 2.5%, according to the study.
"It isn't just a healthcare issue. This is a solvency issue that we need to tackle head on," Cooper said.
4. The middle class is hardest hit when prices rise.
Workers earning more than $100,000 annually aren't as affected by layoffs stemming from higher premiums. Changes to premiums act like a "head tax," as those costs are generally uniform among employees. As a result, paying a $5,000 premium for one employee earning $100,000 annually ends up being cheaper than paying that premium for two employees each earning $50,000 annually.
Workers earning less than $20,000 annually also aren't affected by layoffs because low-wage employees don't typically receive health insurance from their employer.
"This is sort of like a death by a thousand cuts," said Zarek Brot-Goldberg, assistant professor at the Harris School of Public Policy at the University of Chicago and another author of the study. "These small cuts add up to something big."
5. Rising healthcare prices are connected to suicide and overdose rates.
Job losses can lead to severe health consequences, and the death-per-job-loss rate in the U.S. has increased with the opioid epidemic. About 1 in 140 workers die of an opioid overdose within a year of losing their job, the study found.
A 1% increase in healthcare prices, coupled with the downstream effects, leads to a 2.7% increase in deaths from suicides and overdoses among adults aged 25 to 64.
