Commentators are needlessly complicating the story behind populist candidates traction in this presidential cycle. They are right about wage stagnation being the underlying issue, however this nearly 100% due to one and only one reason — healthcare’s hyperinflation.
The formula is simple:
- Healthcare’s unconstrained hyperinflation has to get paid for somehow and middle class gets health benefits via employers;
- Employers are spending far more on employees than 20 years ago but every dollar and then some goes to healthcare creating an economic depression for the middle class (one def’n of an economic depression is 2 or more years of income decline — this has been going on for well over a decade);
- Opportunistic politicians and demagogues capitalize on economic insecurity — much easier to blame the “other” or come up with simplistic explanations that fit a comfortable narrative.
Rand did an in-depth study (PDF) on this. I wrote about this in How Healthcare Explains The Trump/Sanders Michigan Win
NPR interviewed economist Douglas Irwin on why trade is an important issue in the presidential campaign. The Dartmouth College economist, who specializes in trade policy, pointed out that the key issue is actually healthcare as the shift in jobs due to trade has resulted, in aggregate, in more high-paying jobs.
“Wages have been flat even though total compensation is up because healthcare costs are taking that wedge, that bite out of people’s paycheck. So people don’t think they’ve been getting a pay increase at all.”
To make matters worse for the middle class, healthcare is also stealing from things that impact their daily life such as their kids’ schools. Many now have to do school fundraisers for things that taxes used to pay for. This data is from Massachusetts but you’d find similar data elsewhere.
It doesn’t stop there. I have a top 10 list in The U.S. Has Gone To War For Much Less Than What Healthcare Is Doing To America that goes into other factors that collectively add up to justified anger and anxiety. To not end on a negative note, the Health Rosetta (an open source blueprint for how to purchase healthcare smart — both public and private purchasers of healthcare have been derelict in their duties) is the antidote to this mess. Fortunately, there are proven approaches to spend as much as 55% less per capita on health benefits with a benefits package that is better than what 99% of the workforce receives. It simply takes will and it helps if you have a good benefits consultant.
