Soaring health insurance costs are quietly preventing wages from rising higher, while workers also shoulder a larger share of premiums, economist says

Open enrollment season for health care plans is about to begin, and many Americans may get sticker shock after seeing how much premiums will rise. But the rising cost of insurance is also quietly eroding wage gains, preventing workers from getting bigger raises than they would otherwise receive. Health insurance costs are a major issue in the midterm election. In addition to higher gas prices and utility bills, insurance has stoked voter anxiety about the rising cost of living. So despite consistently solid wage gains and a labor market that’s at full employment, consumer confidence gauges have tumbled as overall affordability deteriorates. Fresh economic data illustrate why workers aren’t feeling upbeat about more pay. In the third quarter, wages and salaries increased 3.1% from a year ago, according to the employment cost index released by the Bureau of Labor Statistics on Friday. But at the same time, employer health insurance contributions jumped 6.4%, matching the fastest pace in two decades, according to economist Guy Berger, senior fellow at the Burning Glass Institute. In a Substack post , he calculated that if employer contributions had instead grown at 3%, which was the pace a few years ago, wage growth would be about 0.2-0.3 percentage points faster today. “That’s not a lot, but not nothing either,” Berger wrote. While spending on drugs and hospital care is going up, the ACA market has come under particular strain since 2025, because Congress didn’t renew the enhanced subsidies that were enacted during the pandemic.