Regardless of whether Congress enacts health care reform, the private sector isn’t waiting. Health care for our employees is too expensive, and the employer-based system must be reformed. More Americans — 146 million people, or 57 percent of the country — get health insurance through their employers than they do through Medicare or Medicaid, each with more than 50 million enrollees. But for years, premiums and co-payments have been rising for the workers at America’s private-sector companies. The United States government defines health care as “affordable” if it costs less than 9.7 percent of a household’s income. By that standard, in less than 10 years more than half of employees who are heads of families are projected to be unable to afford their health care costs, creating a significant problem for everyone. This can’t go on. Our health care system may offer cutting-edge cures and treatments, but it’s also cumbersome, expensive and inefficient, especially for the daily, more routine matters that our employees and their families deal with. Two years ago, a small number of corporate chief human resources officers, led by American Express, Verizon and Macy’s, met to figure out if they could come up with a better way to provide coverage for their workers at more affordable rates. Individual companies had done all they could to improve the system, but each hit a wall. There was only so much one company could accomplish on its own. One year later, 21 companies with a total of four million employees began an effort to change the way they paid for health care. Now 41 major corporations that represent over six million workers and retirees have joined together to reform the private-sector health care system. Our companies are diverse, representing pretty much every sector of the economy. Known as the Health Transformation Alliance, we’re troubled by the number of middlemen who drive up the price of care, and by the soaring costs of prescription drugs. The members of the alliance spend $25 billion on health care and, as a result, have a lot of data that helps us identify trends. By studying where the money goes and its impact on patient health, we can see what treatments, which doctors and hospitals, and which medical networks get the best results. Data analysis from IBM is turning what used to be a blizzard of paperwork into a road map for the future. There are things data can tell us that individuals have a hard time learning on their own. For example, if data tell us that 50 percent of patients who visit a particular hospital suffer a relapse for a particular medical condition while only 25 percent of patients who visit a crosstown hospital have a relapse for the same illness, we want our employees to know that — and if possible, to use the hospital with the better results. The data can save lives. Prescription drugs also save lives, but they’re expensive, often in ways hidden from employers and employees alike. This year, the alliance companies changed how we do business with pharmacy benefit managers, the companies that provide prescription drugs for our employees. Rather than having individual companies contract with benefit managers, we worked with CVS and OptumRx on an approach under which we gain more access to drug companies’ pricing structures, strengthening our position in cost negotiations. That results in lower prices for the same medicines and allows the alliance members to achieve considerable savings. We also are working to ensure that formularies, the lists of prescription medicines covered by insurers, are the right ones for patients, not just the most profitable ones. This can increase the use of lower-cost generic drugs. Beginning Jan. 1, these drug reforms alone are projected to save participating companies, their workers and, in some cases, retirees at least $600 million over three years — while achieving the same or better results. Even for large companies, that’s a lot of money. It’s also an inducement for more companies to join our effort. The more that join, the more reforms we can achieve. We and our employees spend more than $5 billion each year on four procedures and ailments: knee replacements, hip replacements, back pain and diabetes. These common problems account for 20 percent of the money our companies spend on treatment. Starting next year, we will create new medical networks in three major cities that will focus on delivering better results for these ailments and procedures at better prices. Our new networks are likely to compete with some doctors and hospitals that don’t have as good a treatment record. The health care arena needs more competition, and we will encourage it. The rising number of companies joining our alliance means corporations recognize that the status quo is not acceptable. Private sector health care must change. We are doing our part to make that happen.
Regardless of whether Congress enacts health care reform, the private sector isn’t waiting. The U.S. Chamber of Commerce is already preparing for a wave of mergers and acquisitions in healthcare as insurers seek to cut costs by merging with one another.