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Expand chart
Reproduced from a Kaiser Family Foundation report; Chart: Axios Visuals

The conventional wisdom is that corporate America has a renewed, almost crisis-level concern about rising health costs. But, in a puzzle I am struggling to solve, the data don’t suggest a basis for a new level of urgency about health costs in corporate America.

Why it matters: In fact, just the opposite is true. There's just not that much change — so any solution that's designed for a crisis will probably miss the mark or could unnecessarily harm workers.

The big picture: As Axios has recently reported in Vitals, employer health costs are eating up a larger share of overall compensation that they did 20 years ago. But as this chart shows, over the last 10 years, health costs as a percentage of overall compensation for larger employers — the ones that are most outspoken on the issue — have moved in a narrow band, between 8 and 9 percent of total compensation.

  • For all private employers, it has remained between 7 and 8 percent of compensation over the same period.
  • Premium growth has also been modest — in the 3 to 4 percent a year range — and is not likely to jump in 2019. There is no question that workers are feeling the pain of out-of-pocket costs, but that’s a different problem.

Between the lines: There may be a few explanations for the perception of a health cost crisis in the corporate world. Employers have held costs down, in part, by shifting them to employees. They may now feel cost shifting is nearing a natural limit.

They get blowback about it from their employees, and most have always seen cost shifting as an expedient way to shave their annual premium increase rather than as a meaningful cost containment strategy.

  • Even if health costs have not been growing recently as a percentage of compensation, there still can be sticker shock, with the average cost of a family policy around $19,000 per year, about the cost of a Honda Civic. Plus, health benefits still consume 7.5% of overall compensation for private sector employers — a significant share, though far less than wages (69.6%).
  • The averages also conceal the fact that some employers are getting hit harder than others.

What we've seen in recent years in our employer survey is largely business as usual, with most employers deploying a grab bag of cost strategies, from cost shifting to disease management to wellness programs and more, without expressing great confidence in any one strategy. That approach is more consistent with the data showing the burden of health costs largely stable with moderate cost growth. 

The bottom line: The data on corporate health costs are at odds with the rhetoric of a crisis or the sense that employers are poised to take dramatic action.  Please let me know what I am missing.

Go deeper

21 mins ago - Technology

3D printing's next act: big metal objects

Chief Scientist Andy Bayramian makes modifications to the laser system on Seurat's 3D metal printer. Photo courtesy of Seurat Technologies.

A new metal 3D printing technology could revolutionize the way large industrial products like planes and cars are made, reducing the cost and carbon footprint of mass manufacturing.

Why it matters: 3D printing — also called additive manufacturing — has been used since the 1980s to make small plastic parts and prototypes. Metal printing is newer, and the challenge has been figuring out how to make things like large car parts faster and cheaper than traditional methods.

Rising rates may hammer the stock market

Illustration: Sarah Grillo / Axios

Stocks are much more vulnerable to interest rate swings than they used to be.

Why it matters: A sharp rise in rates in early 2022 is the key reason the stock market is off to an ugly start. And with the Federal Reserve making noise about trying to keep inflation in check, rates could go higher.

Ina Fried, author of Login
1 hour ago - Technology

Microsoft's Activision Blizzard deal complicates Big Tech regulation

Illustration: Megan Robinson/Axios

Microsoft's surprise $68 billion deal to buy Activision Blizzard is adding a fresh twist to the heated debate over which tech companies have monopolies that need to be reined in.

The big picture: The deal could force a question the company has happily ducked for a decade: whether its size and power make it just as deserving of regulatory scrutiny as its Big Tech rivals.