“The only way to pay less for health care is to pay less for health care.” — Dr. James Robinson, director of health policy, University of California Berkley.
Few political issues impact businesses as much as health care policy. Our employer-driven health care system means that health care is one of the biggest expenses companies carry, and rising health care costs are among the biggest impediments to wage and job growth. On the other hand, for those of us who choose not to have health insurance, a medical emergency can be the first step to bankruptcy.
After 30 years as a small business owner serving Utah employers in the insurance marketplace, I confront this issue daily — with both the rising costs of health care for our employees, and the challenges that our clients are facing.
For years, our clients were lucky: Utah’s healthy lifestyle and youthful population meant that we had relatively low health care costs. But just because our costs are low doesn’t mean that they aren’t rising. A recent report by the Utah Foundation shows that Utah’s health care costs are starting to catch up with other states.
There are a few reasons for this, and improving medicine plays a relatively small role. Hospitals, even nonprofits, have gotten better and better at maximizing revenue. Hospital administrators have realized that they can charge $1,000 for a $2 toothbrush or $3,000 for a $150 MRI and most people, yes, even insurers, won’t notice or do anything about it. Additionally, because people rarely can check prices before they go into a hospital, hospitals have little to no reason to relate their charges to their actual cost of providing services. Lastly, increasing consolidation in the hospital industry means there’s no constraint on health care costs other than shame and insurers’ meager leverage to negotiate better rates. In a market like Utah, where the largest insurer is owned by the largest hospital chain, that desire is especially meager.
Our clients continually ask for more options to address these growing costs. We tell them that if they want to control unreasonable hospital bills then the system must change — they need an advocate who will bring them greater transparency and fairness. That’s why more and more of our clients are choosing to “self-insure.” This means that they hire a company to administer their employees’ health benefits, but pay out the value of their employees' insurance claims, directly taking on the additional risk and responsibility for their employees’ health.
Given the mayhem in health insurance markets caused by Obamacare, companies can save a lot of money by carrying their own risk: Self-insured companies have seen much slower growth in health care costs than traditionally insured businesses. Self-insurance also incentivizes companies to help their employees stay healthy. Of course, the big insurance companies hate that businesses have the option to self-insure, but the product has worked for thousands of businesses.Comment on this story
We also offer our clients access to services that allow them to take control of their health care costs into their own hands, by providing patients with advocates who can review the bills they receive and spot billing errors and unreasonable charges. Obviously, most hospitals don’t like working with these advocates either, because they are simply not used to seeing patients stand up for themselves when they believe a charge is incorrect or unfair. But some relish the opportunity to be on the forefront of rationalizing our health care system and making it more affordable.
We are working hard to make lower health care costs a reality through advocacy and transparency. It’s time we start demanding the same from our hospitals.