The Effects of Minimum Wage on Health Care

The American version of the minimum wage was instituted by Congress in 1938. This legislation was intended to be a support system for poor families to insure that they made a wage high enough to support a family. The minimum wage is based upon the federal poverty level, which was first set in 1959. While the minimum wage may provide more money in the pockets of those that have these low-income jobs, minimum-wage legislation actually has a direct and profoundly negative impact on health care.

Decreased Health Insurance Coverage

• The minimum wage's most profound impact on health care is the influence that it has on health-insurance coverage. An increase in minimum wage results in increased labor cost for small and large businesses. Businesses, in an attempt to recoup the additional funds paid out as a result of the minimum wage increase, begin to look elsewhere in the business to trim operating costs. Businesses often decide to trim, or even altogether eliminate, health-insurance benefits for minimum wage workers.

Increased Medical Costs

• Increased costs for medical care is a direct impact of having fewer people in a health-insurance plan. As the minimum wage increases, people are forced off of employer-sponsored health-insurance plans, which results in the employee being unable to pay his medical bills. Physicians, as more people are unable to pay their medical bill due to a lack of health insurance, feel compelled to raise their rates for medical care to cover the bad-debt expenses incurred as a result of non-payment by their uninsured patients.

Increased Stress On Low-Income Families

• Minimum-wage employees who have been forced off of an employer-sponsored health-insurance plan will begin to feel increased stress as more of their money is dedicated to health care rather than other necessary items such as food, clothing and housing. Children from low-income families have shown an increase in cortisol levels compared to other children from higher-income families. These increased cortisol hormone levels are indicators of a stressful environment, often a direct result of a difficult financial situation.