Reducing Costs and Improving Access to Care

Summary of testimony presented before the U.S. House of Representatives Committee on Education and the Workforce, Subcommittee on Health, Employment, Labor, and Pensions on January 11, 2024.


Christopher M. Whaley, Economist

Employers play a significant role in the United States health care system. Employers provide health insurance coverage for over 150 million people—the largest source of insurance in the United States. Employers also importantly select many of the plan offerings that employees select from, thus determining the types of insurance that most Americans have. Collectively, U.S. employers contribute about $1.2 trillion towards health care spending and thus play an important role in financing the U.S. health care system. A handful of employers have used benefit design innovations to reduce spending and improve access to high quality care. These programs typically use price, utilization, and quality data to identify efficient providers that deliver high quality care at lower prices, and then design incentive programs to direct members to these providers.

A particularly innovative example actually comes from Purdue University, which has used data on local provider prices and quality to contract directly with high value providers and incentivize their use. These types of so-called "direct contracting plans" are often accompanied by further negotiation to price discounts, because providers gain member volume. Due in part to these programs, Purdue has not had employee premium increases in five years and has saved approximately $200 million. Additionally, access to hospital insurer-posted price transparency data required by federal regulations have not been widely useful. These types of data, if further expanded, would allow employers to benchmark their own prices against market rates.

Some self-funded plans, when they ask for their claims data, either for their own use or an entity directed by the self-funded plan to use the claims data, have faced challenges in actually accessing that data. So, some large insurers or third-party administrators often argue that negotiated prices and network design contained in claims data are trade secrets, and thus the employer, even though they're the one that's paying the bill, doesn't have access to that type of data. And I think not having that type of access to data doesn't allow the employer to essentially monitor what's going on under the hood and audit the prices that are being negotiated on behalf of both themselves and, more importantly, their workers.