Healthcare pricing transparency is long overdue



A
report
published last week by the Kaiser Family Foundation confirms what employers and employees already know: Health coverage costs continue to skyrocket.

The study finds that the average annual premiums for employer-sponsored family health care in 2021 are $ 22,221. This is almost $ 1,000 more than last year. Since 2010, premiums have increased by
61%
, versus
27%
for inflation as a whole.

Uncontrollable healthcare costs demonstrate the urgent need for system-wide pricing transparency so that we can identify the best quality care at the lowest possible prices. The establishment of two new
the price

transparency
the rules in the coming months will allow healthcare consumers to cut costs, gain financial security and put hospitals and insurance companies in competition for their customers.

Kaiser’s report reveals that while health insurance companies posted record profits and stock prices during the COVID-19 pandemic, those savings did not trickle down in the form of lower premiums. The premiums are now about a third of
median household income
. The Kaiser study finds that employees pay directly for
about 28%
total annual bonuses through payroll deductions. Yet in reality, workers pay the full cost of the $ 22,221 premium. They finance the rest in the form of lost wages paid indirectly from their payout from the pool of funds that employers budget for total employee compensation.

This Medicare burden disproportionately hurts low-income employees, as price increases represent a larger portion of their compensation. An annual increase of $ 1,000 in premiums affects a worker who earns $ 40,000 far more than a worker who earns $ 400,000. As a result, rising health insurance costs contribute to income inequality.

The National Federation of Independent Businesses reveals that small business owners listed the “cost of health insurance” as their No.1 expense for
over 30 years
in a row. The Employee Benefits Research Institute
find
that the share of small businesses offering health insurance has declined significantly in recent years due to these increased costs. Warren Buffett is right when he calls health care costs a “tapeworm in the US economy.”

The Biden administration has the ability to provide employers with the information they need to dramatically reduce their health coverage costs. It should implement the
Coverage transparency
rule next July. This rule will allow employers to access actual prices, including all negotiated rates and historical claims data, so they can weed out suppliers and insurers who price price gouging and steer their employees towards less care. expensive.

This month, the Biden administration
finalized a separate rule
that will help employers identify the best care at the best prices. The regulation strengthens the Hospital Price Transparency Law, which requires hospitals to publish their updated spot prices and all negotiated rates by payer and plan. A recent
to study
by my organization Patient Rights Advocate finds that only 5.6% of hospitals are fully compliant with the law. The Biden administration’s rule, which takes effect in January, dramatically increases financial penalties on non-compliant hospitals to more than $ 2 million a year.

The initial prices put us in the driver’s seat to take control of our healthcare finances. They will trigger a competitive healthcare market that will put downward pressure on prices, just like in all other sectors of the economy.

Cynthia A. Fisher is a life sciences entrepreneur, founder and president of PatientRightsAdvocate.org, and founder and former CEO of ViaCord.


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