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Employers, Tired of ‘Bloated’ Health Costs, Back Public Option

April 29, 2021, 9:01 AM

Many employers who provide health coverage for their workers want the option of a government-run health plan and a lower Medicare age.

They also support capping hospital prices in noncompetitive markets, as well as having the government negotiate prices for high-cost, sole-source drugs or set limits on drug price increases.

Those findings were from a survey of 302 employers with at least 5,000 employees released Thursday by the Kaiser Family Foundation and the Purchaser Business Group on Health. The companies were surveyed in December 2020 and January.

This is the first survey showing that business leaders believe a public option, which would allow the government to offer health plans based on Medicare rates, deserves serious consideration, Bill Kramer, executive director for health policy at the PBGH, said in an email. It’s also the first time they’ve shown significant support for price caps for hospitals, said Kramer, whose group represents large companies that provide health plans.

The idea of a government-run health plan, known as a public option, as well as lowering the Medicare age to 60, was proposed by President Joe Biden during his campaign, and many congressional Democrats support the proposals.

Eighty-five percent of the executives surveyed expect the government will be required to intervene to provide coverage and contain costs, the survey found.

Employers also want strengthened antitrust enforcement, according to the survey. Hospital consolidation—as well as consolidation between hospitals and physician groups—has made many markets uncompetitive.

And they want limits on out-of-network charges. The No Surprises Act enacted in 2020 prohibits charges for out-of-network medical providers in emergencies or when people are undergoing procedures at hospitals that are in their insurance plan network.

“The current health care system is on an unsustainable path,” Elizabeth Mitchell, president and CEO of PBGH, said in a news release.

“Our large employer members support competition and prefer market solutions,” she said. “But they have reached their limit; they’re tired of pouring tons of money into a broken health care market that delivers uneven quality at bloated costs.”

Employers provide health care for at least 150 million people and are the largest single source of coverage in the U.S. Studies by the Rand Corp. have shown that employers pay hospital fees, the largest single source of U.S. health-care spending, that are more than twice what Medicare pays.

Annual family premiums for employer-sponsored health insurance reached more than $21,000 in 2020, up 55% since 2010, and an increased rate at least twice that of wages (27%) and inflation (19%). The average single-employee deductible increased from $917 to $1,644 during that period for workers with a deductible.

To contact the reporter on this story: Sara Hansard in Washington at shansard@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Brent Bierman at bbierman@bloomberglaw.com

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