Medical expenses, stethoscope on dollar bills.Medical expenses, finance and health concept … [+]
Employer-provided health insurance covers more than half of the U.S. population. Employers with at least 50 full-time workers are required by the Affordable Care Act to provide health insurance to their workers. Is your employer doing a good job?
Two recent class action lawsuits filed by workers have worried many employers. In February, Johnson & Johnson was sued for overpaying for prescription drugs and mismanaging health insurance. In April, Mayo Clinic and its plan administrator were sued for underpayments and lack of transparency.
Both lawsuits cite breaches of fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA), alleging that employers must “only provide benefits and pay plan costs in the sole interest of participants and beneficiaries.” “Manage the plan as a purpose.” ” Fiduciary responsibility arises from the fact that employers use workers' wages to fund medical benefits.
More lawsuits are likely to apply ERISA to employers' management of health benefits. The Consolidated Appropriations Act of 2021 further opens up litigation routes against employers for breach of fiduciary duty under ERISA.
Increased legal risk has led many employers to take a hands-off approach to purchasing health insurance, an approach that outsources management of plan assets to insurance companies or third-party administrators owned by insurance companies. has been forced to reconsider. While employers and workers benefit from reduced health care spending, insurance companies and administrators typically do the opposite.
The incentive imbalance is further exacerbated by the challenge for employers to ensure the accountability and integrity of insurers and administrators, exposing health plans to the risk of mismanagement and exposing employers to laws for breach of fiduciary duty. leave you vulnerable to legal claims.
It's time for employers, especially those with geographically concentrated workforces, to consider bypassing insurance companies and contracting directly with them. The cash price is often lower than the price negotiated by the insurance company. why? Providers face price-sensitive buyers and do not require complex insurance.
Large employers such as Boeing and Walmart contract directly with hospitals and health systems. Platform companies like Mishe have launched cash price-based networks for employers. Direct primary care clinicians, many ambulatory surgery centers, and other innovative healthcare providers welcome direct contracting opportunities.
The prescription drug market is also ripe for cash-based transactions. Generic drugs purchased through direct payment channels, such as Mark Cuban Cost Plus Drug Company and Costco, are often lower than prices negotiated by insurance companies or out-of-pocket costs for patients with insurance.
Even newly available weight loss medications offer great discounts at LillyDirect, Eli Lilly's direct pay pharmacy. Weight loss programs that include medications are also offered through cash transactions at Costco and Sesame.
Congress should codify price transparency laws, specifically regarding cash prices for hospitals, clinical laboratories, imaging centers, and ambulatory surgery centers, as described in Senate Bill S3548. Price transparency encourages direct contracting between employers and providers and stimulates price competition.
Policymakers also need to remove obstacles that prevent employers and workers from fully reaping the benefits of lower cash prices. Qualified cash payments should be allowed to be included in the deduction. Employers should have the option to exclude low-cost routine services, such as generic drugs, from coverage to reduce premiums. Restrictions on health savings accounts (HSAs) should be relaxed to allow workers to enjoy tax benefits with cash payments. Policy-induced unequal playing fields in the hospital market need to be leveled to encourage competition to keep prices down.
It will take both innovative efforts by employers and legislative action by legislators to help employers fulfill their fiduciary responsibilities and reduce litigation risks, with the ultimate goal of benefiting American workers. As the dynamos of the U.S. economy, our employers have a historic mission to bring dynamism to American health care. As Shawn Gremminger, CEO of the National Alliance of Healthcare Purchaser Coalitions, recently quoted Winston Churchill, “Give us the tools and we will get the job done.”
