Nov 26, 2019

How employers could benefit from transparent health care prices

Illustration: Aïda Amer/Axios

Federal proposals that would require hospitals and health plans to publish their secretly negotiated prices may not do much to change individual behaviors, but companies that offer health insurance to employees could use that information to bargain for better rates and lower their health care expenses.

Where it stands: Employer groups are divided over the proposals, despite the potential upside.

The big picture: Revealing prices would allow employers to see which hospitals and doctors are ripping them off and which insurers are obtaining good discounts.

  • Employers then could use the data to drive better bargains for some hospital services, and savings hypothetically could be passed along to workers in the form of higher wages and other benefits.

Yes, but: There are concerns about whether airing prices would paradoxically raise them. And in markets where either providers or insurers are highly consolidated, those entities would still hold all negotiating power.

  • "Price transparency alone is not going to change all that much if we don't change the way we purchase health care," said Kate Baicker, a health economist at the University of Chicago.

What they're saying: Many companies have already endorsed proposals, pending in Congress, to analyze medical claims through a national database.

  • The Society of Professional Benefit Administrators, which represents the third parties that help employers process insurance claims, has suggested that hospitals should have to report certain pricing data.
  • James Gelfund, a vice president at ERIC, a lobbying group that focuses on benefits for large employers, compared the issue to a Gordian knot: "Employers have whipped out their swords and are ready to chop that sucker in half ... so long as everything is secret and proprietary, we're never going to solve anything."

Those views contrast starkly with other major lobbying groups that represent large employers.

  • The U.S. Chamber of Commerce said in September that price transparency proposals were a government overreach and would confuse people. Some of the Chamber's most influential members are health care companies.
  • The American Benefits Council and National Business Group on Health similarly have not endorsed mandatory price disclosures.
  • Consumers First, a coalition of employer and consumer groups, said it doesn't mind unlocking negotiated rates — as long as the rates are only viewable for "payers, providers and policymakers."

Between the lines: The health care industry hates price transparency because it would open their black box, and some employer groups have decided to protect those interests.

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