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Every dollar that an employer spends on health coverage is a dollar that is not available for wages or other employee benefits.

“Only so much money is flowing into the system, and we have to divide that money among health care benefits and cash compensation,” said Adam Block, Ph.D., founder and principal of Charm Economics. “The more health care benefits cost, the less we are able to provide in terms of an annual raise. That compounds over time. An additional 2% a year becomes 40% over time. Because compensation compounds over time, this is a big deal.”

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