Against the background Economic uncertainty and lingering inflation have Massachusetts residents sounding the alarm about their ability to afford health care, which remains their biggest concern after the overall cost of living, according to another recent statewide survey.
Through a new coalition, the Employer Coalition on Health, businesses are working together to make health care more affordable. Local employers are bearing the brunt of rising health care costs, but their voice has been muted recently. As prices and costs continue to trend upward, employers must weigh in on the ongoing policy debate on Beacon Hill to make decisions that will impact price increases and their ability to operate.
That’s why the Coalition is calling on lawmakers to address three key priorities that will help employers reduce health care costs.
First, new policies must reduce health care costs, not increase them. Proposals to impose provider reimbursement floors without corresponding price caps, which would increase health care cost inflation, should not be adopted.
Instead, lawmakers should ease the financial burden on many community hospitals that the government passes on to privately insured and private health insurance buyers from Medicaid and Medicare. These shortfalls force privately insured employers and individuals to make up the shortfall.
As the number of people covered by public insurance grows (MassHealth covers about 2 million people, or 30 percent of Massachusetts’ population), so do cross-subsidies paid by employers, employees, and taxpayers. Without intervention, these cross-subsidies from the private market could grow given the aging population and shrinking small group health insurance market. Higher Medicaid reimbursement rates to providers could help alleviate the burden of this cost shifting.
Second, the Health Policy Commission, the body established to collect data and hold health care officials accountable for annual benchmark trends in health care costs, needs more tools to be effective. Prohibitions on conflicts of interest should be upheld and commissioners should not be paid. The commission needs a dedicated business buyer seat to ensure that employer perspectives are properly represented.
The Health Policy Commission needs more tools to hold health care providers accountable when they exceed annual cost thresholds, including the power to increase penalties for non-compliance. The commission also needs broader authority to collect comprehensive data on all participants in the health care market, including pharmaceutical companies and pharmacy benefit managers. Greater transparency would allow us to better understand where Massachusetts’ more than $71 billion in annual health care spending is going.
Finally, states have a responsibility to keep private health insurance markets viable. Provider consolidation has reduced competition, weakened health insurers’ ability to negotiate reasonable reimbursement rates, and made prices unaffordable for employers and employees. The shrinking small group market, which now covers 50 percent fewer lives than a few years ago, is evidence that we are at a crisis point.
The Department of Insurance’s most recent hearings on Unified Market Rates for 2025 revealed alarming increases in utilization and rapid growth in drug spending. Without exception, plans have suggested that without the ability to control costs through prior authorization, stepped therapy, and other measures, this trend will increase significantly as more biologics, orphan drugs, and gene therapies come to market and demand for weight loss drugs soars. If states are serious about containing health care costs, recent calls to eliminate prior authorization and other cost-control tools must be rejected as reckless.
The state needs to ensure that we are paying for value and not encouraging unjustified utilization and rising costs through further vertical integration in which hospitals own physician groups, outpatient facilities, labs and pharmacies.
As the Steward Health Care fiscal crisis made clear, increased state oversight would ensure the financial health of all health care organizations by subjecting them to rigorous reporting and financial analysis, including private equity investments.
Certainly, we can all play a part in reducing the cost of healthcare: encouraging people to live healthier lifestyles, having stronger public health systems, innovating healthcare delivery, promoting patient-centered care, and leveraging cost-saving technologies are just a few examples.
Employer engagement is essential to advancing these goals. Employers played a key role in passing landmark health care reform legislation in Massachusetts in 2006, and can play a key role again by addressing a key health care issue of our time: health care affordability.
The challenge is enormous, but now is the time for employers to join forces and shape the policy debate to achieve better health care at lower costs.
Eileen McCanney is Employers Coalition on HealthJohn Hurst is Massachusetts Retailers Association.
