Your Raise Didn’t Disappear. Your Health Insurance Ate It.
(SeaPRwire) –
Open enrollment is coming, and the sticker shock is only the visible half of the story. The quieter half shows up in your paycheck, or rather, in the raise you never got. Look at the Bureau of Labor Statistics employment cost index released Friday. Wages and salaries rose 3.1% year over year in the third quarter. Solid on paper. But employer health insurance contributions jumped 6.4% over the same stretch, matching the fastest pace in two decades, according to Guy Berger, senior fellow at the Burning Glass Institute. Compensation is one pool of money. When the insurance slice swells, the wage slice shrinks. That is not a theory. It is arithmetic.
Berger ran the counterfactual in a Substack post. Had employer contributions grown at 3%, the pace of a few years ago, wage growth today would run about 0.2 to 0.3 percentage points faster. His own words: not a lot, but not nothing either. Now place that against the household reality. Many Americans are financing essentials through buy now, pay later plans. For those families, a few tenths of a percentage point is grocery money. Worse, Berger argues the official data understates the squeeze. Employer contributions may not be keeping pace with actual premiums. Employees are paying a bigger share. And the plans themselves cover less, pushing more costs out of pocket. The worker loses three times: smaller raise, bigger premium share, thinner coverage.
The employer-sponsored market is not the only pressure point. The ACA marketplace is in open distress. Premiums will rise 13% in 2027, per KFF’s reading of federal data released Friday, the second biggest hike since 2018, on top of a 26% jump in 2026. A 40-year-old buying a mid-tier benchmark plan now faces a $704 average monthly premium, up from $624 in 2026 and $497 in 2025. The trigger is no mystery. Congress let the pandemic-era enhanced subsidies lapse. Enrollment plunged 12% year over year as of February, down to roughly 19.2 million people. The healthier ones left first. The remaining pool is sicker, which pushes premiums higher, which pushes more people out. Insurers see the spiral too. KFF counted 31 state-level insurer departures as of late October against just eight additions.
This is why consumer confidence has tumbled even with full employment and steady wage gains. Affordability is deteriorating faster than the headline numbers admit, and voters feel it in premiums, gas, and utility bills alike. The practical takeaway for anyone reviewing offers this enrollment season: stop comparing salaries in isolation. Total compensation is the only honest number. Ask what the employer’s premium contribution did this year, what the deductible did, and what the plan stopped covering. A 4% raise paired with a repriced health plan can be a pay cut wearing a costume. Read the benefits sheet before you celebrate the offer letter.