Exploring Employer Opinion on Government Intervention in Health Cost, Coverage

As the COVID-19 pandemic has laid bare issues of rising high health care costs and disproportionate coverage nationwide, executive decision makers at large employers indicated their support for greater government intervention to address these concerns, said Bill Kramer, MBA, executive director for Health Policy at the Purchaser Business Group on Health (PBGH).

Transcript

Can you speak on the recent PBGH, KFF survey of corporate executives on the role of government in addressing health care cost and coverage issues?

Kramer: We conducted the survey because we believed it was important to understand corporate leaders' opinions about the problems of high health care costs and potential solutions to that. With the events in the past year, how we view health care in the United States is changing.

The COVID-19 pandemic has made it ever more clear the problems with our current system, including high costs, incomplete coverage, limited access to care, underinvestment in public health, and serious racial and ethnic inequities. All of this, occurring against the backdrop of ever-rising health care costs is causing many to rethink their priorities and positions on key health care policy issues.

We also recognize that the political landscape has changed in the last few months, extending the range of policy options that will likely be under consideration. For example, there appears to be increasing support among policy makers for strengthening antitrust enforcement and limiting anticompetitive actions that are used by some health care entities to gain market power and increase prices. This includes proposals by policy makers that would regulate or cap prices for certain high-cost drugs.

Other policymakers, as you know, have been calling for a public option and lowering the eligibility age for Medicare to age 60. Now, each of these proposals represents an expanded public role in providing coverage and restraining costs for populations that are currently served largely by private health plans through employer-sponsored coverage.

Now, since these proposals are controversial and likely to face opposition from large parts of the health care industry, we wanted to assess the level of support among large employers who are an important stakeholder. And I'll just say, this survey is the first of its kind to get the opinions of business leaders, the C-suite, who are the ones who make decisions for their companies. In the past, nearly all other employer surveys were conducted with benefits managers within those organizations.

Did you find the majority response in favor of more government intervention on health care coverage and cost surprising? And what lessons can be gained from the survey findings?

Kramer: The interest in government action is driven by serious concerns about the high and ever-rising costs of health care, and therefore the benefits offered by employers to their employees and families. As you know, average family premiums for employer-sponsored health insurance is now over $21,000. That's up 55% since 2010, and it's increasing at a rate more than twice that of wages and inflation.

We also know from recent research by the RAND Corporation that employer commercial health plans are already paying much higher prices for health care goods and services than public plans. Hospitals across the country charge employers and private insurance companies an average of 2-and-a-half times what they get for Medicare, for the same care. And in some states, it's more than 3 times the Medicare payment rate.

Most business executives support competition and prefer market solutions. In fact, many employers are pursuing initiatives on their own to hold down the cost of health benefits—but many feel they've reached their limit. They're just tired of pouring tons of money into a broken health care market that delivers uneven quality at these bloated costs.

So from the employers' perspective, our survey showed that the first step that the government needs to take is to make the market work wherever possible. There's been a trend toward consolidation in the health care industry, and as I said earlier, unfortunately, some hospitals, health systems, physician groups, and drug manufacturers have used anticompetitive contracting and pricing practices to increase their market power and raise prices.

So there is strong support among the employers we surveyed for the government to step in with stronger antitrust enforcement to ensure that any mergers and acquisitions that occur are done in the public interest and are not being done primarily to gain market power and raise prices. And there’s also support for explicit prohibitions on anticompetitive practices that have led to higher drug costs and higher health care costs generally.