Have Companies Hit the Limit on Shifting Health Care Costs to Employees?
Health Care

Have Companies Hit the Limit on Shifting Health Care Costs to Employees?

iStockphoto/The Fiscal Times

Corporate America seems to have a newfound sense of urgency to rein in rising health care costs — costs that Warren Buffett described this year “as a hungry tapeworm on the American economy.” But Drew Altman, president and CEO of the Kaiser Family Foundation, writes at Axios that “the data don’t suggest a basis for a new level of urgency about health costs in corporate America.”

His chart shows that there hasn’t been a sudden inflection point or surge in employer health care costs — just more of the same, steady rise. Health costs as a percentage of overall compensation for the largest employers have been in a pretty steady range between 8 percent and 9 percent over the last decade.

So what’s behind the strengthening drumbeat of corporate concern about health care costs?

Altman’s piece suggests one possible answer: Those costs now represent a larger share of overall compensation than they did a generation ago — and workers frustrated by a years-long lack of income growth and shock-inducing insurance tabs (around $19,000 a year for the average family policy) may be making it harder for companies to continue to employ one of their preferred strategies to keep costs in check.

“Employers have held costs down, in part, by shifting them to employees,” Altman writes. “They may now feel cost shifting is nearing a natural limit.”