Chrysler, 1984: employer healthcare costs then and now

In early March of 1984, Chrysler was spending $600 per car on employee healthcare. That was about 10% of the cost of a new Plymouth Horizon.

Iacocca then commissioned a study of the entire American healthcare system and started publicly pushing for national reform. The New York Times covered it in March of that year.

Forty-two years later, the number is different but the problem is the same.

Employer-sponsored health insurance is the backbone of how most Americans get coverage. It is also, for most mid-sized businesses, the second-largest line item on the P&L after payroll — and the one that gets the least analytical scrutiny relative to its size.

Iacocca understood something that a lot of executives still haven't fully absorbed: your health plan isn't a benefits problem. It's a business problem. The costs are embedded in every unit of whatever you sell. They affect margins, compensation strategy, hiring, and competitiveness.

He was right in 1984. Nobody fixed it.

What's changed is that employers now have more tools, more data rights, and more legal standing to manage this cost actively than they've ever had.

The CAA gives plan sponsors the right to their claims data. Transparency rules are surfacing pricing information that was previously invisible. PBM reform is moving through all levels of government. The self-funded market is maturing in ways that put mid-sized employers in a position they couldn't have been in fifteen years ago.

The question Iacocca was asking in 1984 is one we should be asking today: "why is this so expensive and what can we do about it?"

The employers who ask that question are in a much stronger position than the ones who don't.

Link to the 1984 article in the comments. Worth a read.