Benefits of Slower Health Care Cost Growth for Massachusetts Employees and Employers

April 26, 2012
This report by Jonathan Gruber of the Massachusetts Institute of Technology models the potential benefits to the economy if health care costs were to grow more slowly than projected. In the face of rising health insurance costs, studies find, employers tend to reduce or blunt the rise of employee wages as well as offer less generous insurance coverage. But employers cannot pass along all the increased costs of health insurance as decreased wages and benefits. Any additional costs must be offset either by cutting jobs or by accepting lower business profits. This report presents three potential scenarios of slower health care cost growth between 2011 and 2019 and models the subsequent impacts on employee wages, employer spending on health insurance as well as employer profits and workforce investments. The report finds that slower growth in premiums would result in billions of dollars in savings for both employees and employers.