Employers seek shelter from healthcare cost increases in public option

• A third of the 90 member companies the National Alliance of Healthcare Purchaser Coalitions surveyed in December said a public option would be helpful, according to a recent article in Politico. A quarter of those surveyed criticized the idea.
• HFMA’s Chad Mulvany says 30% of the National Alliance of Healthcare Purchaser Coalitions’ members isn’t a majority, but it is a shift from a decade ago when employers came to the table  with plans and providers to kill the public option being considered for inclusion in the legislation that became the ACA.
• If plans and providers don’t want a public option, then they will need to collaborate to keep healthcare cost growth in line with general inflation.

A recent article in Politico reporting on growing support among some employers for a public option states, “… relentless rising health costs are making some employers think anew, changing conventional wisdom that big business would kill the idea favored by several 2020 Democratic presidential candidates. A third of the 90 member companies the National Alliance of Healthcare Purchaser Coalitions surveyed in December said a public option would be helpful, while one quarter criticized the idea. Some 72 percent favored government regulation of hospital prices. The Business Group on Health, a powerhouse benefits group lobby representing drugmakers, insurers and hospital systems, also is warming to a different sort of government-led health expansion: More than half of members surveyed last year support the government lowering Medicare eligibility as low as age 50. The group didn’t ask about a public option.”

“The change is driven by business frustration that insurers haven’t been able to curb costs and instead allowed hospitals and doctors to profit at employers’ expense,” Politico went on to report. “Relieved of the financial and administrative burden of providing worker health care, employers could offer other perks to attract talent in a tight job market. The willingness to consider the public option comes as employers’ historically close lobbying alliance with the health insurance industry has frayed over issues like the Trump administration’s push to publicize the secret rates hospitals and insurers negotiate. Employers are pushing for more transparency while hospitals and insurers fight the effort as a threat to their business.”

Takeaway

So, 30% of 90 National Alliance of Healthcare Purchaser Coalitions’ member companies surveyed saying a public option would be helpful, is not a majority. And employers will still need to see the details about how a public option is financed before they throw their weight behind actual legislation.

But given that a decade ago, it was employers who came to the table with plans and providers to kill the public option that was being considered for inclusion in the legislation that became the ACA, I’d say the canary in the coal mine is looking a little peaked. The industry still has time — and I’m going to throw insurance brokers into this pot as well, given they probably have the most to lose in a widely available public option scenario — to come together and develop products that effectively manage the total cost of care, as opposed to playing games that allow brokers to tout the size of the discounts they secure off of gross charges.

Given that employers haven’t been willing to adopt products with narrowed networks without larger price concessions from providers, this may also mean that hospitals will need to figure out where there are opportunities to give on price and make it up through volume and shared savings on the back end as a result of reduced trend. The alternative is a version of public option that will likely be based on a lower percentage of Medicare than what providers are currently averaging in their commercial contracts. And if that doesn’t staunch cost growth, it opens the door to “Medicare for All.”

For providers to be good partners to plans and employers, they will need to continue developing the capabilities to succeed under alternative payment models and be willing to engage in these models. Providers can turn to these resources for guidance:

• HFMA’s “The Value Project” research has identified the strategies that high-performing systems have used to be successful.
• HFMA’s upcoming Financial Sustainability Summit will highlight best practices organizations are using to reduce their internal costs so they can remain rate competitive for services where employers have other options.