Better Solutions for Healthcare

Modern Healthcare: Big business wants to take on D.C.’s hospital lobby

By Jessie Hellmann

June 7, 2021

Groups representing some of the largest employers in the U.S. are urging Congress to take on hospitals, arguing consolidation and unfair pricing is driving healthcare costs up at an unsustainable rate.

Corporations previously tended to stay out of controversial healthcare fights on Capitol Hill that would create more government intervention in private markets. But with the average cost of an employer-sponsored family healthcare plan increasing 55% over the past ten years, and most Americans getting insurance through their jobs, something has to change, lobbyists and experts say.

“In the past, I think they’ve been kind of skeptical of government solutions, but I think that the frustration has bubbled over to the point now that they’re saying ‘no, we actually need someone to help,” said Shawn Gremminger, director of health policy at Purchaser Business Group on Health, which represents dozens of large businesses who fund their own insurance plans and assume the financial risk of paying for their employees’ healthcare, including Boeing, eBay, The Walt Disney Company, Walmart and others.

Democrats have put more of a focus on “fair” pay and workers benefits as they control Congress and the White House. Employers say healthcare affordability needs to be part of that conversation.

About 83% of covered workers have an annual deductible for individual coverage — an increase of 25% from five years ago — with an average of $1,644 per year, according to the Kaiser Family Foundation. Research shows high-deductible plans can lead people to putting off necessary care, particularly for low-income populations and people of color.

PBGH and the Kaiser Family Foundation released a poll in April that found 87% of the 300 executive decision makers surveyed believe the cost of providing health benefits to employees will become unsustainable in the next five to 10 years.

A similar percentage said a greater government role in providing coverage and containing costs would be better for their businesses and their employees.

“Employers have been asserting themselves (in Washington) much more stringently than in the past,” said James Gelfand, senior vice president of health policy for the ERIC Industry Committee, a national association representing large employers’ that self-fund their insurance plans. “That’s in part because the situation has spiraled out of control.”

Commercial plans pay providers about two times what Medicare does for the same services. While hospitals point to this as proof Medicare rates are too low, some critics argue mergers, “anti-competitive” contracting, and other practices have given hospitals more leverage to request unfair rates from private payers.

Hospital spending makes up about one-third of national health expenditures, totaling $1.2 trillion in 2019, with private insurers covering about 40% of that. However, hospital leaders argue some facilities would cease to operate if commercial rates were reduced to Medicare levels.

The average annual premiums for employer-sponsored coverage was $21,343 per family in 2020, according to the Kaiser Family Foundation, with enrollees paying about one-third of those costs.