Wednesday, September 16, 2009

Benefit costs rising more slowly than direct pay

Medical and pension benefits are a victim of the recession:
As the [second] graph shows, though, that decline isn't the result of any serious slowdown in medical inflation. No doubt there's a lot of shifting of costs onto employees going on, either in the form of dropped coverage or higher co-pays.
As we pointed out in our July 13 issue, a substantial portion of the rise in consumption over the last couple of decades has been driven by spending on medical care. With all this apparent cost-shifting from employers to employees going on, pressures on household budgets have been increasing -- another reason to wonder where any sustained consumption revival can come from.

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