Another High Cost of Health Insurance

The Federal Reserve Bank of New York says the low cost-of-living raise you got this year is directly caused by the growing cost of health insurance. New York Fed researchers surveyed businesses in New York and Northern New Jersey and found health insurance for employees rose higher than other business expenses.

Some reported an average increase of more than 13%.

“Businesses providing insurance to their workers indicated that absent these cost increases, they would have raised wages by roughly an additional percentage point, on average,” NY Fed researchers wrote in a blog post.

“There does appear to be a connection between rising health insurance costs and wage growth among many firms,” the report noted.

The average wage increase over the past year for service companies and manufacturers hit 3.8%. Health insurance costs holding steady would have let the companies stretch the raise to 4.7%.

The Kaiser Family Foundation notes employer-sponsored health insurance was close to $27,000 in 2025. That’s up 26% from 2020 and with employers pay 75% of the insurance cost.

So it’s expensive.

Reducing pay increases isn’t the only way these companies are dealing with rising health insurance costs. Many are hiking prices of services and products. Some are taking losses in profit margins to pay for the increases.

“A number of firms reported that they had offset at least some of the increased costs by reducing health insurance coverage to workers or by increasing employee contributions,” the New York Fed researchers concluded.

Source link: The Hill — https://bit.ly/3NqIUx3