Last week, six notable associations representing health insurers and large employers announced Better Solutions for Healthcare (BSH): “An advocacy organization dedicated to bringing together employers, consumers, and taxpayers to educate lawmakers on the rising cost of healthcare and provide ideas on how we can work together to find better solutions that lower healthcare costs for ALL Americans.”
BSH, which represents 492 large employers, 34 Blue Cross plans, 139 insurers and 42 business coalitions, blames hospitals asserting that “over the last ten years alone, the cost of providing employee coverage has increased 47% with hospitals serving as the number one driver of healthcare costs.”
Its members, AHIP, the Blue Cross Blue Shield Association, the Business Group on Health, Public Sector Health Care Roundtable, National Alliance of Healthcare Purchaser Coalitions and the American Benefits Council, pledge to…
- Promote hospital competition
- Enforce Federal Price Transparency Laws for Hospital Charges
- Rein in Hospital Price Mark-ups
- Insure Honest Billing Practices
And, of particular significance, BSH calls out “the growing practice of corporate hospitals establishing local monopolies and leveraging their market dominance to charge patients more…With hospital consolidation driving down competition, there’s no pressure for hospitals to bring costs back within reach for employees, retirees and their families…prices at monopoly hospitals are 12% higher than in markets with four or more competitors.”
The BSH leadership team is led by DC-based healthcare policy veterans with notable lobbying chops: Adam “Buck” Buckalew, a former Sen. Lamar Alexander (R-TN) staffer who worked on the Health Education, Labor and Pensions (HELP) committee and is credited with successfully spearheading the No Surprises Act legislation that took effect in January 2022, and Kathryn Spangler, another former HELP staffer under former Sen. Mike Enzi (R-WY) who most recently served as Senior Policy Advisor at the American Benefits Council.
It’s a line in the sand for hospitals, especially large not-for-profit systems that are on the defensive due to mounting criticism.
Examples from last week: Atrium and Caremont were singled in NC by the state Treasurer for their debt collection practices based on a Duke study that got wide media coverage. Allina’s dispute with 550 of its primary care providers seeking union representation based on their concerns about patient safety. Jefferson Health was called out for missteps under its prior administration’s “growth at all costs” agenda and the $35 million 2021 compensation for Common Spirit’s CEO received notice in industry coverage.
My take:
BSH represents an important alignment of health insurers with large employers who have shouldered a disproportionate share of health costs for years through the prices imposed for the hospitals, prescriptions and services their employees and dependents use.
Though it’s too early to predict how BSH vs. Corporate Hospitals will play out, especially in a divided Congress and with 2024 elections in 14 months, it’s important to inject a fair and balanced context for this contest as the article of war are unsealed:
- Health insurers and hospitals share the blame for high health costs along with prescription drug manufacturers and others. The U.S. system feasts on opaque pricing, regulated monopolies and supply-induced demand. Studies show unit costs for hospitals along with prescription drug costs bear primary responsibility for two-thirds of health cost increases in recent years—the result of increased demand and medical inflation. But insurers are complicit: benefits design strategies that pre-empt preventive health and add administrative costs are parts of the problem.
- Corporatization of the U.S. system cuts across every sector: Healthcare’s version of Moneyball is decidedly tilted toward bigger is better: in healthcare, that’s no exception. 3 of the top 10 in the Fortune 100 are healthcare (CVS-Aetna, United, McKesson)) and HCA (#66) is the only provider on the list. The U.S. healthcare industry is the largest private employer in the U.S. economy: how BSH addresses healthcare’s biggest employers which include its hospitals will be worth watching. And Big Pharma companies pose an immediate challenge: just last week, HHS called out the U.S. Chamber of Commerce for siding with Big Pharma against implementation of drug price controls in the Inflation Reduction Act—popular with voters but not so much in Big Pharma Board rooms.
- The focus will be on Federal health policies. BSH represents insurers and employers that operate across state lines–so do the majority of major health systems. Thus, federal rules, regulations, administrative actions, executive orders, and court decisions will be center-stage in the BSH v. corporate hospitals war. Revised national policies around Medicare and federal programs including military and Veterans’ health, pricing, equitable access, affordability, consolidation, monopolies, data ownership, ERISA and tax exemptions, patent protections and more might emerge from the conflict. As consolidation gets attention, the differing definitions of “markets” will require attention: technology has enabled insurers and providers to operate outside traditional geographic constraints, so what’s next? And, complicating matters, federalization of healthcare will immediately impact states as referenda tackle price controls, drug pricing, Medicaid coverage and abortion rights—hot buttons for voters and state officials.
- Boards of directors in each healthcare organization will be exposed to greater scrutiny for their actions: CEO compensation, growth strategies, M&A deals, member/enrollee/patient experience oversight, culture and more are under the direct oversight of Boards but most deflect accountability for major decisions that pose harm. Balancing shareholder interests against the greater good is no small feat, especially in a private health system which depends on private capital for its innovations.
8.6% of the U.S. population is uninsured, 41% of Americans have outstanding medical debt, and the majority believe health costs are excessive and the U.S. system is heading in the wrong direction.
Compared to other modern systems in the world, ours is the most expensive for its health services, least invested in social determinants that directly impact 70% of its costs and worst for the % of our population that recently skipped needed medical care (39.0% (vs. next closest Australia 21.2%), skipped dental care (36.2% vs. next closest Australia 31.7%) and had serious problems/ were unable to pay medical bills (22.4% next closest France 10.1%). Thus, it’s a system in which costs, prices and affordability appear afterthoughts.
Who will win BSH vs. Corporate Hospitals? It might appear a winner-take all showdown between lobbyists for BSH and hospital hired guns but that’s shortsighted. Both will pull out the stops to win favor with elected officials but both face growing pushback in Congress and state legislatures where “corporatization” seems more about a blame game than long-term solution.
Each side will use heavy artillery to advance their positions discredit the other. And unless the special interests that bolster efforts by payers are hospitals are subordinated to the needs of the population and greater good, it’s not the war to end all healthcare wars. That war is on the horizon.
HENRY KOTULA 