If the money my employer pays to buy my health insurance increases by 25% over three years, but the services provided me are no better, or actually deteriorate, then is it fairer to say that my ' total compensation...that has been increasing in recent years', or that 'the dollar cost of what my non-salary compensation has been purchasing has been increasing in recent years'?

When it comes to articles concerning the economy, I would think that there is a bias in the audience.   I mean how many people making the national average are going to read about economic gauges.  I'm not saying they shouldn't care, but the majority of people reading the article will be connected to Wall Street in one way or another.  And what Wall Street is looking for is greater profits or the Fed to stop raising interest rates.

I think it's fair to say that the quality of health care is constantly improving and that is why its cost is higher.  It could be pushed higher than it should be by artificial forces.  Certainly, diagnosis of diseases using today's technology is much more accurate and less invasive than they have been in the past.

If you're going to argue that rising health care costs are the result of better quality care, you should be ready to bust out the numbers. How much better?

No, let's look at health care costs. Tell me how much on a percent basis care quality has risen. You assert that quality has increased, show your work.

The average is meaningless--since all the gain could be among high income earners. What's the change in median hourly income? That's a more meaningful statistic.

And I assert that it is IRRELEVANT to the point I am making whether quality is improving.

Three points.



1. Real wages are not rising all that fast in any case. We don't have CPI data for January yet, but assume there is no zero in the CPI from December to January. Then the real average hourly wage in January 2005 was $16.42. That's a loss of one cent over the year. Any increase in the CPI since December implies a larger loss.



2. This is the average hourly wage for production workers. That means folks on the lower end of the pay scale who are less likely to be compensated in any manner other than wages. The rise in total compensation is just that. The relatively fast growth in compensation reflects the growing inequality among workers.



3. Total compensation doesn't even mean an increase to today's workers. If, during the growth of the stock bubble, companies underfunded their pensions thinking the bubble wealth was real, they might have a lot to make up these days. That means accelerating contributions to pension funds, which would then show up as faster growth in compensation. That doesn't mean workers are getting compensated any more for their work. Of course, this makes the second point even more important, as any increase in pension contributions or increase in health insurance spending means nothing to those workers that get neither.

That's an excellent example.  No, your real compensation didn't rise at all, even though the sum of the nominal value has risen. Your compensation in the both periods was 30,000 dollars plus X gallons of gas.  The cost to the employer of providing that compensation doesn't affect your compensation one iota.

In health care, compensation has been falling. Employees lose a a larger share of their paycheck and are paying higher drug copays. Even if the cost to the employer of providing this in-kind benefit has risen,  from the employee's perspective, her compensation has fallen, not risen.

The employer decided to provide this inkind benefit (for tax reasons, mostly.  Health care became deductible during WWII wage controls as a way of increasing compensation without raising wages.).  That those in-kind benefits have risen in cost does not mean that the employee's benefit has risen. 

Well I guess you can blame the increasing insurance premiums or decreasing coverage on profit motives.  HMOs are increasingly guilty of this especially since some of them are now profitable rather than unprofitable like they were during the late 90's.  I can't blame them for trying to break even, and that explains a part of the rise in premiums.  Everyone back then was paying less than they should have.

The other part is profit motivated and so I'll agree that premiums are higher today than they should be.

And insurance doesn't socialize risk.  An insurance company assumes the risk so that people don't have to store away a mound of cash in case that improbable misfortune strikes.  They'll calculate how much the misfortune costs and how likely it's going to happen and then charge a premium for assuming that risk.  Those with more costly or more likely misfortunes should pay more.  That's how car insurance works and that's how most types of insurance work.

Socializing the risk is welfare and that's what the government is in the business of doing.  The result is a higher premium on average in the form of a uniform group rate.  But yes, those high risk individuals don't have to pay $1400 per month.