The Consolidated Appropriations Act that passed this year will next year make self-insured employers the fiduciaries for the healthcare services that they purchase, which means they’ll have more say about quality and cost but also more responsibility.
This portion of the approximately 5,600-page act hasn’t gotten as much attention as, for instance, the parts that guard against surprise billing of patients or expand patient access to telehealth, but it could mean a significant shift in power toward employers, experts say.
“That is a role that they are prepared to take on effectively, but that means all the partners that they rely on—their PBMs, pharma, health plans, consultants—will have to become transparent and accountable,” Elizabeth Mitchell, CEO of the Purchaser Business Group on Health, tells Fierce Healthcare. “Most of the healthcare system is not ready for that, so there is going to be increased pressure from purchasers to make sure that they are paying for the right things that improve health and well-being.”
PBGH comprises about 40 large private and public employers that spend $350 billion on coverage for approximately 21 million. Mitchell contends that consolidation among stakeholders in the last decade—a process that occurred among hospitals and physicians particularly—makes an “opaque and unresponsive” healthcare system even more so.
“I think that we are going into some turbulent times," she said. "Purchasers, at least the ones that I work with, are ready to take a much more active and interventionist role on behalf of the health and well-being of their employees. There is going to be a lot of change required on the healthcare industry side, and I think it’s going to be challenging for many of the incumbents who have not had this pressure before.”
About 160 million people in the U.S. have employer-sponsored healthcare coverage, and 65% of them are in self-funded plans, according to the Kaiser Family Foundation. Furthermore, 82% of workers in large firms (200 or more workers) and 20% in small firms (between three and 199 workers) are in plans funded in part or whole by employers.
Mitchell says healthcare costs growing without a corresponding increase in quality is a problem the “healthcare industry has had decades to fix. This is not a new problem or a new assessment. And now we’re facing a recession.”
When the economy experiences two consecutive quarters of negative GDP growth—which the U.S. economy has the last two quarters—that’s usually considered a recession. However, most policymakers wait for the National Bureau of Economic Research, a group of economists with a Business Cycle Dating Committee that usually makes the official call.
David Cutler, Ph.D., an internationally known healthcare economics expert, tells Fierce Healthcare that “we should always expect health benefits to become less generous in a recession. This is especially true because the costs have increased so much recently due to the shortage of workers. Until that worker shortage ends, there will be demands for price increases, and this is likely to translate into higher premiums and thus greater increases in cost sharing.”
Hear more from Elizabeth Mitchell in a future episode of "Podnosis."