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What are employers doing as health care costs grow?

Just consider a few of these basic facts about some trends in U.S. health care.

1. US health care spending rose 5.3 percent in 2014, even as spending on prescription drugs shot up 12.2 percent.

This was during a period when salary increases averaged 3 percent, although the large majority of workers received smaller increases.

2. Spending on prescription drugs is the fastest growing part of healthcare costs.

In Massachusetts, spending on prescription drugs increased 13% in 2014, while overall healthcare spending in that state grew 4.8%.

According to an Express Scripts Trend Report, the cost of brand drugs almost doubled between 2008 and 2014. Even though the costs for generic drugs on a per prescription basis declined during the same period, the increasing use of generics made the absolute amount spent on these medications rise as well.

3. Workers are paying an increasing share of these rising health care costs.

The consultancy Aon claims that the growth of health care spending is actually tapering down, but most Americans correctly feel these costs are eating more of their paychecks because companies keep shifting a larger share of premium costs onto their employees. Employers have been steadily shifting constantly higher portions of premium costs to their workers since 2012. If the increasing deductibles and co-payments paid by workers are also taken into account, employers' expenditures for all health care costs have actually been going down.

If that's not bad enough, real wages have been declining at the same time. In the period between 2007 and 2013, the median real income of U.S. workers actually fell by $5,116.

4. This process of shifting health care's cost burden to consumers has been a major reason for the stagnating/declining income of the country's middle class.

Given a Republican-dominated Congress, the prospect for genuine, government-led reform of U.S. health care remains at best remote.  The new Speaker of the House is a fervent, rightwing ideologue who openly boasts about his desire to decimate social spending and government participation in health care. Even among Democrats, significant health care reform has taken on a third-rail status similar to gun control legislation. The experiences of Hillary Clinton tanking her husband's first term with a Rube Goldberg, health care initiative, as well as Obamacare wiping out Democratic majorities in Congress, have made even Democrats reluctant to address needed reforms.

So if government is likely to offer minimal leadership, then what about the private sector? Pharma's outsized profit margins and the growing piece of GDP consumed by health care come not only from government coffers, but also from the hides of U.S. companies and their employees.  Fifty-five percent of Americans receive their coverage through employment. That means other sectors of the economy are supporting pharma's fat profit margins.

Are companies in these other sectors willing to keep subsidizing pharma systems, hospital networks and major health insurers?

In particular, what are large employers in this region – Comcast, Verizon, Lockheed Martin, Vanguard, others – doing to actively get a handle on ballooning health care costs?

Most large companies across the country remain content to pass along higher percentages of the health care bill to their employees and avoid other measures. In the C-suites, the reasoning is that health care isn't their business and if they start mucking around in other sectors, what's to prevent those companies from reciprocating?

To the contrary, health care's spiraling costs now make it everyone's business. Sticking the increases to their employees while wages stagnate or decline can't continue indefinitely. Unless every company has a secret plan for handling rotten morale, employee defections and outright sabotage, the private sector has to take some initiative.  So what are the Philly area's big employers doing and are they accomplishing anything?

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