Regardless of how the Supreme Court rules on health care reform later this month, there is a clear mandate from business that the status quo cannot continue.
Health care costs continue to rise at an unsustainable rate, threatening the bottom line for American companies and the well-being of our economy. Rising costs also chip away at American companies' ability to stay competitive in the global marketplace. General Motors reports health care costs for the average GM employee add anywhere from $1500 to $2000 to the sticker price of a car. Across the country, wages are also negatively impacted as employers are forced to shift more of the health care cost burden to their employees. If one subtracts out the employee share of health insurance premiums, workers' average hourly wage and salary compensation increased by just 0.7 percent per year from 2000 to 2009.
That's why employers must continue to pressure policymakers in Washington to pursue policies that contain health care costs and improve quality. First, large employers should pressure Medicare to move ahead with reforms that pay for care based on value, not volume. Large employers have been sending this signal to health plans and providers for the past two decades, with some success. Given that government is responsible for almost 50 cents of every dollar spent on health care in this country, Medicare can send a strong signal to the market. Over the past year, the Medicare program has made strides, changing the way it pays hospitals.
Second, large employers should be strong advocates for better performance measures -- and for publicly sharing performance information -- about health care providers and hospitals. This infrastructure is necessary for effective payment reform and other cost containment initiatives, so we start paying for the care that works, not care that is unsafe or unneeded. If Medicare really gets its ducks in a row, it can drive market change by empowering consumers to shop for higher value care. For example, the Medicare Physician Compare website could send a huge signal to the market if it ever publishes meaningful data on the quality of individual physicians. This would allow seniors to be well-informed when selecting a physician.
Third, large employers can express support for new types of market innovations designed to improve the cost and quality of care. For example, under the Affordable Care Act, Medicare has created a handful of pilot Accountable Care Organizations, or ACOs, which are new arrangements between providers and health plans designed to reduce the cost and improve the quality of care. Already Medicare's ACO initiative has motivated the private sector to spawn several ACO-like pilots across the country. Some, like one launched in Sacramento, have already seen savings of nearly 20 percent of annual health care spending. New research shows that although health care spending continues to rise, it is beginning to do so at a slower pace. Much of this can be attributed to the recession, but leading experts also point to the trend in care that is more accountable.
Finally, large employers should continue to bolster Washington's push for electronic health records. Electronic health records may not be the cure-all for rising health care costs, but their deployment has proven to enhance the safety, efficiency and overall quality of patient care. The more providers use them in a way that is meaningful, the better the overall results. Again, government can encourage this through policy and the power of the purse by tying Medicare payments to the Meaningful Use of electronic health records.
Between our two organizations, the Silicon Valley Leadership Group and the Pacific Business Group on Health, we have collectively more than 400 member companies from across California and the nation. On the Silicon Valley Leadership Group's annual survey, CEOs consistently ranks health care as a top concern for the business and employees.
As we wait for the Court's decision, it is an uncertain time. But regardless of the ruling, there is still much that employers can do to support policies to push the cost curve down.
This piece was co-authored by Carl Guardino, President and CEO of the Silicon Valley Leadership Group, a public policy trade association that represents more than 375 of Silicon Valley's most respected companies. The Pacific Business Group on Health represents 60 large employers who provide insurance to almost 10 million Americans.