At the Democratic presidential primary debate in Ohio earlier this month, the candidates again spent most of their time lamenting the state of American health care.
That’s no surprise. Last month, the Kaiser Family Foundation revealed that the average employer-sponsored family health care plan exceeded $20,000 this year — a 54% increase since 2009. For employees, who are on the hook for more than $6,000 of these costs, prices have risen by 71% while deductibles have doubled.
A JAMA study released this month found that waste amounts to roughly 25% of total health care spending. Health care costs now make up nearly 20% of the American economy, meaning employers and employees sacrifice one day of work each week to pay for this health care bloat — about double the developed-world average.
The candidates argue that some version of Medicare for All is the solution. Yet there is a far less disruptive and risky alternative that the country should try first: transparent prices. Businesses, not politicians, should take the lead on this much-needed reform.
Access to price information enables a competitive, trusted market where providers differentiate themselves on price and quality. Armed with this critical information, patients would be empowered with choice and control over their health and wealth decisions. No longer would they put off going to the doctor or hospital in fear of the unknown potential financial ruin.
In June, the Trump administration issued an executive order to improve price and quality transparency in health care. Yet for a lasting fix to surprise billing, waste, and costs, American businesses must take matters into their own hands. That means leveraging their market power to demand price discovery.
Employers should first require that their providers, insurers, and third-party administrators reveal claims information about their secretive, negotiated rates. By understanding both claims data and real prices, employers can price shop, avoid price gouging providers, push back on overcharges, and even eliminate middlemen. They can then steer their employees to high-quality, low-cost providers and reap the savings. By lowering the costs of care and coverage, employers would improve employee and company earnings.
Business leaders should also ensure that their third-party administrators don’t sign contracts with expensive, opaque, and monopolistic hospital systems. These players usually forbid the construction of benefit designs that prioritize quality, low-cost providers. Instead, contracts should incorporate these cost-saving alternatives through incentives such as no co-pays, no deductibles, and cash bonuses from shared savings. Innovative self-insured businesses have cut their health costs by nearly 50% without sacrificing care through direct contracts with such price transparent physicians, surgical centers, and hospitals.
These employers have improved access and beneficiaries’ health by contracting with primary care physicians and providing 24/7 access to doctors via telemedicine. They also say that these steps have substantially improved employees’ health engagement and chronic care management while reducing emergency room visits and hospitalizations.
Companies such as Lowes, Amazon, and Walmart send their employees to contracted “centers of excellence,” which compete on outcomes for services like oncology as well as pre-agreed upon prices.
Walmart has been even more aggressive at reducing costs for their employees, customers, and community. The company recently launched its own health care clinics in Georgia, advertising affordable prices and integrated care access. These clinics offer Sam’s Club members low-cost, quality care with primary care visits for $40, eye exams for $45, and dental cleanings for $25.
For scheduled surgical care, such as joint replacements, hernia repair, or heart bypass surgery, it is often far cheaper for employers to pay travel expenses to send their employees to price- and quality-assured surgical centers than visiting a local, opaque hospital system. Examples of such centers include OSS Health in York, Pennsylvania, and Texas Free Market Surgery of Houston.
Yet most employers have been complacent about ever-increasing health care prices, which don’t need to continue their inexorable rise. CEOs would never tolerate the waste and opacity in other parts of their businesses that they accept from the health care system. They wouldn’t order inventory from their supply chain without an upfront agreement on what they have to pay. Likewise, they wouldn’t have any customers if they didn’t post their own prices. It’s time for employers to demand the same efficiencies and price discovery from health care that they do from all the other expense items of their businesses.
Even with today’s broken system, business leaders have more of an opportunity to substantially lower health care costs for all stakeholders than do those politicians on the stage. Employers ultimately have the power to fix health care by insisting on discoverable prices and making health care work like the rest of the economy.
Cynthia A. Fisher is a life sciences entrepreneur, the founder and chairman of PatientRightsAdvocate.org, and the founder and former CEO of ViaCord Inc.
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