Not happy about your salary increases (or lack thereof) over the past decade? You might want to blame it on healthcare.

While many factors may be contributing to the lack of salary increases in America, have you considered that one of the biggest culprits might be the rising cost of healthcare? In the past decade alone, health insurance premiums for families have risen 73%, dramatically outpacing increases in family income (read more here about the study by The Commonwealth Fund). At the big picture level, $3.6 trillion (yes, trillion) was spent on healthcare in the U.S. in 2013 (our entire GDP was $16.72 trillion). If you’re having trouble grasping this amount of money, here’s another way to look at this total (hopefully without sending you into shock): the U.S. spends on healthcare the equivalent of Germany’s entire GDP ($3.6 trillion) or over a third of China’s GDP ($9.33 trillion). For a complete list of global GDPs, almost all of which are exceeded by our healthcare spending alone, click here. Now take it in for a moment; it’s a lot to digest.

When healthcare costs account for nearly a quarter of our GDP, it’s difficult not to assign it some responsibility for our stagnant wages.

Increases in business healthcare costs have remained far ahead of increases in wages since the 1970s (check out this Huff Post article for some more startling statistics about our healthcare system). And if employers are busy spending their money on the rising cost of healthcare for their employees, that means they’re probably investing less back into their company for growth and salary increases. It’s just simple math.

And it can have a snowball effect. Less money spent on growth and salary increases means fewer new jobs being created, and less disposable income for American families. When the healthcare system siphons all our wealth, our economy suffers overall.

Employers have tried to control the amount of money they invest into healthcare by switching their employees to high-deductible health plans (HDHPs). These plans expose the insured to higher out-of-pocket costs, but they feature much lower premiums, so they’re more affordable for businesses. Still, healthcare costs continue to rise across the board, severely limiting the potential for salary increases.

You may be thinking at this point, “Isn’t all of this out of my control?” Well, the truth is, while healthcare costs are on the rise, what you pay isn’t out of your control. As price transparency continues to illuminate the healthcare industry (you should read our blog post on this subject), American medical consumers (businesses, families, and individuals alike) can be part of the solution of driving down healthcare costs. Being able to choose your medical care provider based on quality and price empowers you to pay less for great care, which means less money out of your pocket. Since health insurance premiums are based directly on total medical claims, paying less for our care also means that we’ll start seeing reductions in premiums. And that overall reduction in healthcare costs, in turn, could lead to some long-overdue salary increases.

This is why it’s so important for everyone to take an active role in our healthcare. The industry has us in a pretty tough spot right now. But isn’t it empowering to know we have some control of our future?


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