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PolitiFact: Are wages finally growing faster than health insurance costs?

 
President Barack Obama points to a person who wants to ask a question as he spoke at Taylor Stratton Elementary School in Nashville, Tenn., Wednesday, July 1, 2015. The president is in Nashville to speak about the Affordable Care Act. (AP Photo/Mark Humphrey) TNMH110
President Barack Obama points to a person who wants to ask a question as he spoke at Taylor Stratton Elementary School in Nashville, Tenn., Wednesday, July 1, 2015. The president is in Nashville to speak about the Affordable Care Act. (AP Photo/Mark Humphrey) TNMH110
Published July 2, 2015

The statement

"By one leading measure, what business owners pay out in wages and salaries is now finally growing faster than what they spend on health insurance" for the first time in 17 years.

President Barack Obama, June 25, in a speech about the Affordable Care Act

The ruling

Obama's point is that employers have been spending more and more on health care, so they couldn't increase wages. Now, he says, health care costs are reined in, which means workers can get more in their paychecks. We wanted to know if Obama was right that this was the first time this has happened since 1998.

The White House told us Obama got his numbers from the Bureau of Labor Statistics' Employment Cost Index, which measures changes in employee compensation over time.

The data show that, in the past 17 years, wages grew faster than health care in just one 12-month period, and it was recently: from March 2014 to March 2015. Health care costs grew 2.5 percent, compared with a 2.6 percent rise in wages.

Obama's claim was specific in looking at the growth in employer health care costs from year to year. Other measures have found similar trends when looking at changes over longer periods of time and employees' share of the insurance tab.

Bloomberg, for example, bookended a 25-year period and found that health costs for business almost quadrupled from 1987 to 2012, while wages doubled. According to a report from the health care think tank the Commonwealth Fund, between 2003 and 2013, average family premiums jumped 73 percent, while median family income increased 16 percent.

While Obama's numbers are accurate, experts had a few words of caution. First, it's too early to tell how big of a role Obamacare played in curbing health care costs. Beyond legislation, experts also count the recession and a slowdown in medical advancements as potential reasons.

"I don't think people know the exact relationship between health care costs and Obamacare," said Janet Currie, a professor of labor and health economics at Princeton University. "I think (the claim) is true now. Whether it'll be true next quarter is another matter."

Second, Obama's purported impact on paychecks could go both ways.

"Because of the (law's) increasing binding tax or penalty on the 'Cadillac' insurance plans, some employers may scale back on the generosity of plans and shift compensation toward wages," said Jeffrey Clemens, a professor of health economics at the University of California at San Diego. Small firms may be pushed the other way, he said: "If their insurance packages fall short, firms in that position would need to increase benefits and maybe take from wages."

Third, less expensive health care isn't necessarily something to cheer about. It could reflect more bang for your buck and a more efficient system, but if the price reflects the quality of care or access to it, cheaper doesn't mean better, Clemens said.

We rate this claim Mostly True.

Linda Qiu, Times staff writer

Edited for print. Read the full version at PolitiFact.com.