With health insurance premiums growing four times faster than workers’ earnings from 2001 to 2007 (78 percent compared to 19 percent, respectively), workers and employers are paying increasing attention to health care costs. A new report in the Kaiser Family Foundation’s Snapshots: Health Care Costs series examines changes in wages and benefits since the 1960s, and concludes that one way working families may be feeling the impact of rising health care costs is through smaller increases in their paychecks.

The Snapshot focuses on the growth in health insurance costs paid by employers and changes in the size of health care expenses compared with wages, other benefits, and national gross domestic product. It finds that the total amount employers spent on group health insurance policies has grown more than twenty-fold in constant 2006 dollars from $23 billion in 1960 to $537 billion in 2006. Employer payments for health benefits increased as a share of total compensation in every decade, while wages fell as a share of employee compensation.

Total compensation—wages plus benefits—as a share of our national gross domestic product has remained fairly stable during the period, with wages consistently the largest component of worker compensation. However, average health benefit costs paid by employers have increased from 0.6 percent of gross domestic product in 1960 to 4.1 percent in 2006. Wages and Benefits: A Long-Term View is available online.

Prepared by Kaiser Family Foundation staff, the online series, Snapshots: Health Care Costs, uses charts, data and analysis to look at key issues affecting the cost of health care in the United States. Other Snapshots in the series have covered topics including medical technology’s impact on health care costs, the effect of tying health insurance subsidy eligibility to the federal poverty level, and health spending in the United States and Organization for Economic Cooperation and Development countries.