Because health care costs are paid out of employee wages, slowing those costs boosted worker pay. Thanks in large part to the slowdown of health cost inflation, worker incomes grew faster in the 1990s than in any decade since the 1960s.
If health care costs go up, and compensation goes up to pay for the costs, than, even if the worker doesn't see the cost detailed on his pay stub, his income went up. What did not go up is his wages. Well its a bit more complex than that, if prices go up, along with, and about the same amount that nominal income goes up, then you haven't had a significant change in real income. If you adjust for the general inflation rate (as usually income measures are and should be adjusted for), then real incomes did go up, from the extra health care costs being paid for by the employee, OTOH it could be argued, that since all of this specific form of additional income is going towards health insurance, that you should adjust it by the inflation rate in health insurance (I suppose you could also argue for it based on the inflation rate in health care, because health care from the insurance is what the worker actually cares about, but the compensation he is getting is subsidized insurance, not directly health care).
If you substitute wages for income, in the sentence I quoted above than all the complexities of the last paragraph go away. |
