By Kyle Maziarz

On October 3, CHIR held the first in a series of in-person policy briefings on the future of employer-sponsored insurance (ESI), sponsored by Arnold Ventures and West Health. The event, featuring remarks from U.S. Senator Maggie Hassan and a panel discussion moderated by Sarah Kliff of The New York Times, spotlighted state cost containment policies and employer strategies to inform the federal policy process concerning ESI, which covers almost half of all Americans. A recording of the event can be found here.

Key Takeaways from “The Future of Employer-Sponsored Insurance”

Senator Hassan kicked off the event with information about hospital outpatient facility fees and their effects on health care spending and consumers’ out-of-pocket costs. She noted that the increased revenues for hospitals generated by outpatient facility fees do not correspond to an increase in quality of care. The Senator highlighted bipartisan legislation that she has co-authored, in partnership with Senators Braun and Kennedy, to protect patients from unfair hospital facility fees.

CHIR’s Christine Monahan then provided an overview of ESI and some of the key market trends affecting access and affordability of this critical source of coverage. She documented how premium increases for ESI have not only outpaced inflation rates but also workers’ earnings, even while employers have increasingly shifted financial risk to workers through higher deductibles. These trends have made it so more than two in five adults with ESI have reported difficulty affording insurance premiums, medical care, or a prescription. This lack of affordability can be attributed to skyrocketing hospital and pharmaceutical prices, in no small part because of consolidation in the health care market. Many employers lack the negotiating power necessary to drive down prices. They must rely on private insurance companies or third-party administrators (TPAs) who have largely failed to contain costs in the ESI market. This presentation set the stage for the panelists to delve into the question of the day: can employer-sponsored health insurance be saved?

Three panelists, moderated by Sarah Kliff, discussed their experience with state policy and employer initiatives to improve the affordability of ESI as well as the federal government’s opportunity to effect change.

• Chris Deacon from VerSan Consulting emphasized health plan administrators’ fiduciary duty under federal law, requiring them to deliver value for plan enrollees. Before starting VerSan Consulting, Deacon ran the state employee health plan of New Jersey, the largest employer-based health plan in the state.
• Gloria Sachdev is the President and CEO of the Employers’ Forum of Indiana. Sachdev shared her experience leading a coalition of private employers to successfully advocate for new state laws to expose monopolistic hospital billing practices and improve affordability for employers and consumers.
• Joshua Wojcik is the Assistant State Comptroller in Connecticut, where he runs the state employee health plan. Wojcik spoke about his efforts to bypass their TPA to directly contract with providers and deliver higher quality, cost effective care to plan enrollees.

Here are some key highlights from the event:

Can Employer-Sponsored Health Insurance Be Saved?

Each panelist believes ESI can—and needs to—be saved. Despite myriad issues plaguing employers and workers, experts described strategies to pave a path forward to more affordable coverage, including price regulation, better tools for employers to comply with their fiduciary duties, and system-wide transparency. The panelists noted that while price regulation may be necessary, political realities may dictate more incremental approaches to improving affordability.

What can the federal government do to support and sustain employer-sponsored health insurance?

Although the three panelists hail from different states, they all agreed that federal policymakers have an opportunity to support employers’ efforts to deliver higher quality, more affordable care to workers and their families. First, however, it will be important to bring employers’ (and workers’) voices to the table, so that federal policymakers understand the challenges facing this market. Sachdev talked about her “secret sauce” in getting traction on certain policies, noting that the key to legislators’ hearts lies within employer testimonials and lobbying. Second, the panelists emphasized that policies must address not just high costs but also clinical quality and patient outcomes. Wojcik, for example, noted his plan’s efforts to shift towards value-based contracting with providers, and the need to engage providers as partners in cost containment strategies. Third, the panelists called for greater transparency throughout the commercial insurance system – transparency of claims data, transparency of the financial incentives that drive the behavior of the constellation of intermediaries that service ESI (TPAs, pharmacy benefit managers, benefit advisors, etc.), and transparency of the transactions driving consolidation and acquisitions across the industry. Deacon in particular argued for federal action to support greater transparency and more muscular employer purchasing, noting that a key place to demonstrate leadership would be the Federal Employees’ Health Plan. The panelists also called on the federal government to more aggressively enforce antitrust laws and curtail anti-competitive behavior among providers.

The event closed with an open Q&A where audience members spoke with panelists about various issues, such as employer engagement, employers’ bandwidth to keep up with cost pressures, and how litigation in this area could impact stakeholders. The next event in the series will be held on February 27, 2024. You can sign up for our mailing list to receive more information here.