[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
LOWERING COSTS AND INCREASING
ACCESS TO HEALTHCARE WITH
EMPLOYER-DRIVEN INNOVATION
=======================================================================
HEARING
Before The
SUBCOMMITTEE ON HEALTH,
EMPLOYMENT, LABOR, AND PENSIONS
OF THE
COMMITTEE ON EDUCATION AND THE
WORKFORCE
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, DC, JANUARY 11, 2024
__________
Serial No. 118-33
__________
Printed for the use of the Committee on Education and the Workforce
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via: edworkforce.house.gov or www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
56-309 PDF WASHINGTON : 2024
-----------------------------------------------------------------------------------
COMMITTEE ON EDUCATION AND THE WORKFORCE
VIRGINIA FOXX, North Carolina, Chairwoman
JOE WILSON, South Carolina ROBERT C. ``BOBBY'' SCOTT,
GLENN THOMPSON, Pennsylvania Virginia,
TIM WALBERG, Michigan Ranking Member
GLENN GROTHMAN, Wisconsin RAUL M. GRIJALVA, Arizona
ELISE M. STEFANIK, New York JOE COURTNEY, Connecticut
RICK W. ALLEN, Georgia GREGORIO KILILI CAMACHO SABLAN,
JIM BANKS, Indiana Northern Mariana Islands
JAMES COMER, Kentucky FREDERICA S. WILSON, Florida
LLOYD SMUCKER, Pennsylvania SUZANNE BONAMICI, Oregon
BURGESS OWENS, Utah MARK TAKANO, California
BOB GOOD, Virginia ALMA S. ADAMS, North Carolina
LISA McCLAIN, Michigan MARK DeSAULNIER, California
MARY MILLER, Illinois DONALD NORCROSS, New Jersey
MICHELLE STEEL, California PRAMILA JAYAPAL, Washington
RON ESTES, Kansas SUSAN WILD, Pennsylvania
JULIA LETLOW, Louisiana LUCY McBATH, Georgia
KEVIN KILEY, California JAHANA HAYES, Connecticut
AARON BEAN, Florida ILHAN OMAR, Minnesota
ERIC BURLISON, Missouri HALEY M. STEVENS, Michigan
NATHANIEL MORAN, Texas TERESA LEGER FERNANDEZ, New Mexico
JOHN JAMES, Michigan KATHY MANNING, North Carolina
LORI CHAVEZ-DeREMER, Oregon FRANK J. MRVAN, Indiana
BRANDON WILLIAMS, New York JAMAAL BOWMAN, New York
ERIN HOUCHIN, Indiana
Cyrus Artz, Staff Director
Veronique Pluviose, Minority Staff Director
------
SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS
BOB GOOD, Virginia, Chairman
JOE WILSON, South Carolina MARK DeSAULNIER, California
TIM WALBERG, Michigan Ranking Member
RICK ALLEN, Georgia JOE COURTNEY, Connecticut
JIM BANKS, Indiana DONALD NORCROSS, New Jersey
JAMES COMER, Kentucky SUSAN WILD, Pennsylvania
LLOYD SMUCKER, Pennsylvania FRANK J. MRVAN, Indiana
MICHELLE STEEL, California PRAMILA, JAYAPAL, Washington
AARON BEAN, Florida LUCY McBATH, Georgia
ERIC BURLISON, Missouri JAHANA HAYES, Connecticut
LORI CHAVEZ-DeREMER, Oregon ILHAN OMAR, Minnesota
ERIN HOUCHIN, Indiana KATHY MANNING, North Carolina
C O N T E N T S
----------
Page
Hearing held on January 11, 2024................................. 1
OPENING STATEMENTS
Good, Hon. Bob, Chairman, Subcommittee on Health, Employment,
Labor, and Pensions........................................ 1
Prepared statement of.................................... 4
DeSaulnier, Hon. Mark, Ranking Member, Subcommittee on
Health, Employment, Labor, and Pensions.................... 7
Prepared statement of.................................... 9
WITNESSES
Beehler, Michele, Senior Director of Health and Wellbeing,
Schweitzer Engineering Labs (SEL).......................... 11
Prepared statement of.................................... 14
Josh, Laura, General Manager, California Schools VEBA........ 18
Prepared statement of.................................... 20
Ducas, Andrea, Vice President of Health Policy, Center for
American Progress.......................................... 34
Prepared statement of.................................... 36
Whaley, Dr. Christopher M., Health Economist, RAND
Corporation................................................ 48
Prepared statement of.................................... 50
ADDITIONAL SUBMISSIONS
Ranking Member DeSaulnier:
Letter dated January 10, 2024 from California Public
Employees' Retirement System........................... 80
Letter dated January 11, 2024 from the American
Federation of State, County and Municipal Employees.... 82
Testimony dated January 23, 2024 from Marilyn Bartlett... 108
Chavez-DeRemer, Hon. Lori, a Representative in Congress from
the State of Oregon:
Statement dated January 11, 2024 from Lori Chavez-DeRemer 112
Courtney, Hon. Joe, a Representative in Congress from the
State of Connecticut:
Article dated January 10, 2024 from The Hill............. 65
Foxx, Hon. Virginia, a Representative in Congress from the
State of North Carolina:
Statement dated January 11, 2024 from Transcarent........ 85
Letter dated January 10, 2024 from ATA Action............ 91
Statement dated January 11, 2024 from ERIC............... 92
Statement dated January 11, 2024 from Purchaser Business
Group on Health........................................ 96
Letter dated January 10, 2024 from Partnership to Advance
Virtual Care........................................... 105
Statement dated January 25, 2024 from Business Group on
Health................................................. 113
Testimony dated January 11, 2024 from Health Rosetta..... 118
Testimony dated January 11, 2024 from VerSan Consulting,
LLC.................................................... 121
Letter dated January 11, 2024 from Parkview Health....... 125
Letter dated January 24, 2024 from Corporate Health Care
Coalition.............................................. 129
QUESTIONS FOR THE RECORD
Responses to questions submitted for the record by:
Dr. Christopher Whaley................................... 133
LOWERING COSTS AND INCREASING
ACCESS TO HEALTHCARE WITH
EMPLOYER-DRIVEN INNOVATION
----------
Thursday, January 11, 2024
House of Representatives,
Subcommittee on Health, Employment, Labor, and
Pensions,
Committee on Education and the Workforce,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:17 a.m.,
2175 Rayburn House Office Building, Hon. Bob Good [Chairman of
the Subcommittee] presiding.
Present: Representatives Good, Walberg, Allen, Burlison,
Chavez-DeRemer, Houchin, Foxx, DeSaulnier, Courtney, Norcross,
Wild, Hayes, Manning, and Scott.
Staff present: Cyrus Artz, Staff Director; Nick Barley,
Deputy Communications Director; Mindy Barry, General Counsel;
Jackson Berryman, Speechwriter; Michael Davis, Legislative
Assistant; Isabel Foster, Press Assistant; Daniel Fuenzalida,
Staff Assistant; Sheila Havenner, Director of Information
Technology; Taylor Hittle, Professional Staff Member; Andrew
Kuzy, Press Assistant; Georgie Littlefair, Clerk; CJ Mahler,
Professional Staff Member; John Martin, Deputy Director of
Workforce Policy/Counsel; Hannah Matesic, Deputy Staff
Director; Audra McGeorge, Communications Director; Rebecca
Powell, Staff Assistant; Seth Waugh, Director of Workforce
Policy; Maura Williams, Director of Operations; Nekea Brown,
Minority Director of Operations; Ilana Brunner, Minority
General Counsel; David Foster, Minority Senior Health and Labor
Counsel; Carrie Hughes, Minority Director of Health & Human
Services Policy; Suyoung Kwon, Minority AAAS Fellow; Stephanie
Lalle, Minority Communications Director; Raiyana Malone,
Minority Press Secretary; Olivia McDonald, Minority Staff
Assistant; Kota Mizutani, Minority Deputy Communications
Director; Veronique Pluviose, Minority Staff Director; Dhrtvan
Sherman, Minority Committee Research Assistant; Nick Schiach,
Minority Legal Intern; Jamar Tolbert, Minority Intern; Adrianna
Toma, Minority Intern; Banyon Vassar, Minority IT
Administrator.
Chairman Good. The Subcommittee on Health, Employment,
Labor, and Pensions will come to order. I note that a quorum is
present, and without objection, the Chair is authorized to call
a recess at any time.
President Ronald Reagan once said the nine most terrifying
words in the English language are I am from the government, and
I am here to help. The government often causes more harm than
it does good, and that is particularly true when it comes to
healthcare. Thankfully, America is filled with innovators and
problem solvers, and today we will hear from some of those
leaders on these important topics of lowering prices for
quality healthcare.
The cost of healthcare is one of the greatest challenges
our country faces. Last year healthcare spending reached four
and a half trillion dollars, costing over $13,000.00 per
American citizen. Meanwhile, Medicare is set to become
insolvent by 2031. In 2023, Federal subsidies for healthcare
insurance are estimated to be 1.8 trillion, or 7 percent of our
GDP, our gross domestic product.
This has led to premiums drastically increasing for
commercial insurance. The other side does not seem to
understand that when the government subsidizes something, it
actually becomes more expensive. It merely shifts the costs
from the patient to the taxpayer. In my district in Campbell
County, Virginia, premiums for a family plan have increased 81
percent, or $9,000.00 over the last decade.
So much for the claim that premiums will go down with the
Affordable Care Act. The Biden administration's plan is to
increase spending, and impose more mandates, which will only
result in more inflated healthcare prices, further bankrupting
our country.
Today we are going to learn from innovators in the business
world who are delivering savings to workers through lower
healthcare costs, while still providing timely access and
quality care. Employers not only have a strong incentive to
deliver high-quality benefits to retain their employees, but
they also have a legal, fiduciary obligation to do so.
Unsurprisingly, 67 percent of Americans are satisfied with
their employer-sponsored care, but sadly the system is rigged
against employers who want to pursue value-based models. It
takes time and resources for healthcare innovators to overcome
the significant economic and regulatory barriers in place
across the country.
We can learn a lot from the witnesses here today, as well
as from other innovators who are working to overcome these
barriers and teach employers how to use innovative models as
well. In 2012, Walmart, the largest private employer in the
world, launched its Center of Excellence, or COE program, which
directs patients to specific sites and providers for specialty
care.
Since the launch of Walmart's COE program for spine
surgery, Walmart has found that patients who underwent surgery
at a COE, had a shorter hospital stay, and drastically lowered
readmission rates and that patients returned to work sooner
than non-COE patients.
For the 2017 benefits year, it has estimated that Walmart,
Lowes, and McKesson saved 19.4 million through their spine and
joint surgery programs. Schweitzer Engineering Lab, which is
represented here today, saved nearly 2 million dollars in 2023
by participating in innovative models. California VEBA, or
VEBA, is also represented here today, and has drastically
slowed premium growth in its plans, and its beneficiaries have
reported a 94 percent satisfaction rating.
The Boeing Company also engages in direct contracts with
doctors and health systems, effectively bypassing insurance
companies. One study found that patient cost sharing decreased
expenses per procedure by $498.00 for orthopedic and surgical
procedures when using the direct contract model. However, many
barriers still exist, which make it especially difficult for
small and mid-size employers to use these models.
One barrier is a lack of data. Employers often struggle to
access their own health plan and spending data from their
third-party administrator. Without this information employers
and providers are unable to adequately design innovative
payment methods and assess quality and savings.
Another barrier is the overzealous State regulators, who
threatened to prohibit or over-regulate payment models that
allow provider risk sharing, even when the payment is between a
self-funded ERISA plan and a provider. Some states even try to
regulate these self-funded ERISA plans as insurance carriers.
Furthermore, inconsistent quality measurement standards
pose a challenge in the healthcare market. The lack of
reasonably established costs and quality benchmarks can be a
challenge for employers, providers, and third-party
administrators. These barriers often translate into
administrative burdens, costing time, money, and personnel to
navigate and overcome.
These are administrative burdens that many small and mid-
size companies do not have the resources to cover. One solution
would be to allow employers to take advantage of economies of
scale by permitting them to join together in one direct
contract with a provider. Another solution could be to
strengthen data sharing requirements, as this Committee has
done in the provisions included in the House-passed Lower Cost
More Transparency Act.
The Federal Government could also clarify that ERISA self-
funded plans can participate in innovative payment models
without being targeted by overzealous State regulators. These
are just a few of the ways to address barriers employers face
today.
Our witnesses will speak more about the different
challenges and solutions that Congress can consider when
providing space for our healthcare innovators and business
owners. I look forward to today's discussion and seeking ways
to create more pathways for lower cost, high-quality and
innovative healthcare, and with that, I yield to the Ranking
Member for his opening statement.
[The prepared statement of Chairman Good follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. DeSaulnier. Thank you, Mr. Chairman, and welcome back
everyone to this committee in the Congress. I hope you had a
wonderful holiday break, Mr. Chairman, and everyone. While I am
interested in hearing from the witnesses today about the work
that some employers are doing to foster innovation, as I have
often said, I am agnostic in some regards to health care, well
in many regards as a consumer, unfortunately, of health care in
the last few years as a survivor of cancer and 4 weeks on a
ventilator.
I see the inefficiencies in our current system personally
and professionally. I also think that when you look around the
world, holding Walmart up, Mr. Chairman with all due respect,
as sort of a model, I cannot disagree with more--what paradise
on earth, we all could be Walmart employees as a former small
business owner who had to deal with them.
There is a mixed market and the rest of the industrialized
world either has, like the British, a full public system of
health care, or a mixed, like the Japanese and the Germans, and
so if we can show some place that actually works with a
complete free market, I would be interested in seeing how that
works and perhaps somebody could enlighten me today to that
model.
14 years ago, President Obama signed into the law the
Affordable Care Act, an innovative, that seems to be the word
of the day, piece of legislation that has reduced the
universal, the uninsured rate, to the lowest level in American
history. Before the ACA, by law insurance could deny people
with health care coverage because of pre-existing conditions,
including pregnancy, substance abuse disorder, and even cancer.
Insurance, insurers, could also charge a woman more than
men for health insurance. What was once considered an out of
reach privilege for many Americans has turned into more than 20
million consumers projected to sign up for the coverage during
this year's open enrollment period, a dramatic increase over
last year's record enrollment. congressional Democrats and the
Biden-Harris administration continue to build on the ACA and
have made historic strides toward patching remaining loopholes
in our health care system and expanding high quality healthcare
coverage for Americans. Quality insurance for health is very
important, not just cost.
In 2021, congressional Democrats passed the American Rescue
Plan, which enhanced the ACA tax credits to lower monthly costs
for low-income individuals, and eliminated the subsidy cliff,
so that more low-and moderate-income individuals could get
coverage.
In 2022, congressional Democrats passed the Inflation
Reduction Act. This historic legislation extended the premium
tax credit enhancements, capped the cost of insulin for people
with Medicare, and, for the first time, directed the Federal
Government to negotiate lower prices for prescription drugs
covered by Medicare.
Democrats have demonstrated that innovation, there goes
that word again, provides relief to workers and families from
the burden of excessive health care costs. Unfortunately, many
of the bills proposed by my friends on the other side during
the current Congress, would undermine in my estimation,
affordability, and quality of care, and ultimately make it
harder to access quality coverage.
For example, expanding association health plans might
provide lower premiums for some enrollees, but it would
increase costs for other consumers in the traditional insurance
market, while adding nothing to address the underlying price of
healthcare. That is a bad deal for American workers and for
small business.
The idea of scale for small businesses is one that I would
appreciate exploring more, but the devil is in the details. I
have heard many of my colleagues call to repeal the drug price
negotiation program outlined in the Inflation Reduction Act.
Repealing this program would reverse the hundreds of dollars in
savings on out-of-pocket costs that those in Medicare have
benefited from.
Similarly, I am concerned that everyday Americans are
increasingly being pushed to adopt unregulated, low-quality
junk health care plans. These plans often discriminate against
people with preexisting conditions, like myself, do not cover
essential health benefits, and raise costs throughout the
health care system. Instead of encouraging counterintuitive
policies, we should work together in good faith, recognize our
differences in approach, to focus on expanding quality health
coverage for all Americans, workers, families, employers, and
their employees.
Together we can strengthen the Affordable Care Act to
expand access to quality health care by lowering prescription
drug costs for all Americans. Last July, House Democrats
introduced the Lowering Drug Costs for American Families Act to
rein in pharmaceutical price gouging and reduce prescription
costs for Americans with private health insurance, including
those covered by employer-sponsored health plans.
It is also worth noting that similar legislation passed by
House Democrats during the 116th and 117th Congress would have
slashed premiums and cost-sharing for privately insured
individuals by as much as $53.8 billion, save American
businesses $43.1 billion, and raise worker's wages by $116
billion.
In short, when employers save more, employees take home
more. This is good for everyone, including the American economy
as they have more disposable income to spend. This is the
innovation we should strive for. With that, I want to thank you
again, thank the witnesses, and look forward to the discussion.
[The prepared statement of Ranking Member DeSaulnier
follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Good. Thank you, Ranking Member. Pursuant to
Committee Rule 8(c), all members who wish to insert written
statements into the record may do so by submitting them to the
Committee Clerk electronically in Microsoft Word format by 5
p.m., 14 days after the date of this hearing, which is January
24, 2024.
Without objection, the hearing record will remain open for
14 days to allow for such statements, and other extraneous
materials referenced during the hearing to be submitted for the
official hearing record. I will now turn to the introduction of
our distinguished witnesses.
Our first witness is Ms. Michele Beehler, who is a Senior
Director of Health and Well-being for Schweitzer Engineering
Laboratories, or SEL, which is located in Pullman, Washington.
Welcome.
Our second witness is Ms. Laura Josh, who is a General
Manager of California School VEBA, which is located in San
Diego, California. Welcome.
Our third witness is Ms. Andrea Ducas. Andrea or Andrea?
Andrea, Andrea, who is the Vice President of Health Policy at
the Center for American Progress, which is located in
Washington, DC. Welcome.
Our final witness is Dr. Christopher Whaley, who is the
Health Economist at the RAND Corporation, and is located in
Providence, Rhode Island.
We thank all of our witnesses for being here today. I look
forward to your testimony. Pursuant to Committee rules, I would
ask that you each limit your oral presentation to a 5-minute
summary of your written statement. I would also like to remind
the witnesses to be aware of their responsibility to provide
accurate information to this Subcommittee. I first recognize
Ms. Beehler for 5 minutes.
STATEMENT OF MRS. MICHELE BEEHLER, SENIOR DIRECTOR OF HEALTH
AND WELLBEING, SCHWEITZER ENGINEERING LABORATORIES, PULLMAN,
WASHINGTON.
Mrs. Beehler. Chair Good, Ranking Member DeSaulnier, and
members of the Subcommittee, thank you for holding this
important hearing. Thank you for the opportunity to testify. I
am Michele Beehler. I am the Senior Director of Health and
Wellbeing at Schweitzer Engineering Laboratories, SEL.
SEL was founded by Dr. Edmund Schweitzer over 40 years ago
in the basement of his home in Pullman, Washington. We are a
proud 100 percent employee-owned American company, researching,
designing, and manufacturing right here in the U.S. At SEL we
specialize in creating digital products and systems that
protect, control, and automate power systems here at home and
in 170 countries around the world.
We make power outages safer and shorter in duration. We add
cybersecurity, automation, and communication to critical,
electrical infrastructure. We have over 6,500 employee owners
worldwide, nearly 10,000 covered lives in our U.S. healthcare
system, and we have a presence in 37 states around the country.
At SEL we are rooted in a seat of values that we call our
principles of operation. These principles guide us, and in the
words of Dr. Schweitzer, they help us to run our business the
way our mothers would want us to.
Central to these principles are the ideas of ownership and
community. When it comes to healthcare, we believe we should
own our claims data, and we can make the best and informed
decisions, and meet our fiduciary responsibility to our
employees and their families. We strive to empower employee-
owners to take ownership of pricing and quality information to
make the right choices for themselves and their families.
We believe in strong community partnerships, especially
with our local hospitals to take ownership, and work toward
lower cost and higher quality care. This drive for ownership
inspired SEL to start our own health clinics over 10 years ago
to serve employee owners and their families.
SEL now has two health clinics in the United States, and in
2023 these clinics completed over 20,000 patient visits. Our
medical staff includes a doctor, nurse practitioners, nurses,
physical therapists, mental health professionals, and a
pharmacist. We provide convenient access to high-quality,
comprehensive primary care services at no out-of-pocket cost to
our patients.
We deliver high-quality and patient centric care with
virtually no wait time, and at similar or lower costs than
other clinics. We have removed barriers when it comes to
seeking care--with a simple walk across the parking lot, our
employee owners can see their healthcare provider.
We are proud of our work, and support in the mental health
space as well. We offer in-house counselors, a robust employee
assistance program, and free virtual counseling services for
all employees and their families. We are excited about the
continued growth of our pharmacy program, which has
consistently delivered savings, while improving patient care.
SEL has a physician dispensing pharmacy with medications
such as anti-biotics, and dosage starting drugs. We counsel our
patients on drug interactions, and help patients review their
prescriptions to look for ways to serve on lower cost options,
like generic drugs.
Recently, by working with just 25 individuals to help them
identify low-cost sources for their medications, we will likely
reduce our annual pharmacy care spend by 25 percent. Let me
share with the Committee just one example of the positive
impact your policies are having on individuals.
Recently, we worked with an employee-owner taking a drug
that cost nearly $10,000.00 per month, with an out-of-pocket
cost of nearly $3,000.00 per month for them. Sadly, the
employee was taking on mounds of credit card debt and
struggling to pay for basic needs like groceries and utilities,
just to pay for this medication.
In utilizing our in-house pharmacist, we identified a
generic equivalent on Mark Cuban's Cost Plus pharmacy for
$12.80 a month, saving the employee nearly $36,000.00 a year in
out of pocket expenses, and saving SEL an additional
$84,000.00, for a total savings of $120,000.00. That is the
power of transparency.
In addition to improving our healthcare and benefits
offerings within SEL, we also began to work with external
partners, like our local hospitals and providers, through
direct contracting. On the policy front, the No Surprises Act,
specifically Section 201, has been tremendously helpful,
providing us with critical access to claims.
This law, along with others, has given us more valuable and
useful information about the market, equipping us with the
right tools to find the price that is both fair and reasonable
for SEL, and the provider as well. Thank you again for the
opportunity to testify today.
[The prepared statement of Mrs. Beehler follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Good. Thank you, Mrs. Beehler, and I would now
like to recognize Ms. Josh for 5 minutes for your opening
statement.
STATEMENT OF MS. LAURA JOSH, GENERAL MANAGER, CALIFORNIA SCHOOL
VEBA, SAN DIEGO, CALIFORNIA
Ms. Josh. Chairman Good, Ranking Member DeSaulnier, and
distinguished members of the Committee, thank you for the
opportunity to appear before you today. My name is Laura Josh.
I am the General Manager of California School's VEBA. VEBA was
founded in 1993 through the combined efforts of school
superintendents and representatives of the California Teachers
Association, and the California School Employees Association,
to combat rising healthcare costs in Southern California.
Since then, we have grown to more than 70 participating
public sector employers, including four of the top ten largest
school districts in California, as well as the County of San
Diego, with more than 150,000 covered members in our plan. We
are now the fourth largest purchaser of healthcare in the State
of California.
VEBA strives to leverage our collective purchasing power to
keep health premiums low and ensure access to comprehensive
benefits designed to keep employees physically and mentally
healthy. As a 501(c)(9) nonprofit healthcare trust, all funds
are spent on member benefits and health improvement, and we are
governed by a board that represents both labor and management.
As fiduciaries, at the heart of every decision we make is
our members, which are our teachers, our custodians, our
transportation workers, and other staff who have dedicated
their professional lives to educating future generations. We
strive for the highest quality benefits at the lowest possible
cost to keep more in each worker's paycheck, and drive as many
tax dollars as possible to student education.
This is our motivation to innovate and keep costs low. VEBA
consistently beats national averages with annual aggregate
premium increases around just 4 to 5 percent. Additionally, as
a recent member survey, VEBA delivered a 94 percent member
satisfaction rating.
The trust and satisfaction that we built over the past
three decades has enabled us to think more about the long-term
cost drivers of healthcare in a more creative and personalized
manner. In order to drive innovation that will reduce
healthcare costs, four critical things are needed. First,
transparency.
True transparency enables you to know where every dollar is
going and ensure that it is fully utilized. This is one of the
primary reasons VEBA is working to remove regulatory barriers
to direct contracting in California, and we are the first to
participate in a groundbreaking pilot that directly contracts
with health systems using risk bearing contracts.
Transparency also helps us ensure incentives are aligned
across the healthcare industry, so providers, payers and
purchasers are all singularly aligned on improving population
health, and treating each patient holistically, meeting both
their physical and mental health needs.
Second, competition. We need robust competition in the
healthcare market to drive down costs. Having visibility into
our contracts through the direct contracting pilot will
facilitate this competition, drive more effective cost
structures, allow for greater innovation, and give the consumer
more visibility into their care options.
Third, market power. While we have seen significant
consolidation in the healthcare industry, many purchasers
remain fragmented in trying to negotiate on their own. Policies
that allow purchasers to come together and navigate the market
jointly will help drive down costs.
Finally, removing barriers to innovation. VEBA worked
closely with State regulators to enable our direct contracting
pilot, but barriers still exist that prevent us from further
partnering with small businesses or enabling the organizations
in other states to benefit from these important, direct
contracting models.
At VEBA we have successfully fought the rising costs in
healthcare through innovative patient-focused care, and quality
programs. VEBA and other purchasers can achieve quality care at
lower cost and build on our success if Congress takes the
following actions. First, remove barriers to employer
participation in value-based programs, such as high-performance
networks, and direct contracting.
Next, increase transparency into healthcare claims and in
counter data, along with information on costs and quality for
healthcare providers. Next, ease Federal and State restrictions
on pooling with appropriate protections for small employer
groups to bring the VEBA value to other employers.
Finally, invest in our pipeline of critical mental health
workers and other healthcare professionals. I look forward to
discussing with the Committee how we can work together to bring
more patient centered innovation to the employer marketplace
using direct contracting, improving transparency, leveraging
group purchasing, and cementing a commitment to cost reduction
while improving the health of our members. I look forward to
your questions.
[The prepared statement of Ms. Josh follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Good. Thank you, Ms. Josh. Now I recognize Ms.
Ducas for 5 minutes for your opening testimony.
STATEMENT OF MS. ANDREA DUCAS, VICE PRESIDENT, HEALTH POLICY,
CENTER FOR AMERICAN PROGRESS, WASHINGTON, D.C.
Ms. Ducas. Thank you to the subcommittee for your attention
to this critical issue. I will begin by acknowledging the
squeeze employers are facing when it comes to providing
affordable coverage. This phenomenon is not new. I know it well
from my time working at a small nonprofit back in 2009, before
the ACA.
We had around 50 employees, the vast majority of whom were
women, and several of whom had kids or were pregnant in the
past year. It was close to impossible to keep premiums
manageable. I knew health care, so I was asked to help find a
solution, and what we wound up with even then was an exclusive
provider product with no out-of-network coverage.
I applaud the employers who are doing what they can to
bring costs down on their own, while trying to do right by
their employees. Some of the innovations being discussed today
can even be successful for the businesses who invest the
considerable time and resources developing them.
Unsurprisingly though, only small numbers do. There are
limits to success considering the headwinds of health care
consolidation and high prices. Employers, instead of being
responsible for bending the cost curve, should be able to focus
on their core business.
I am passionate about health policy, and I would have liked
nothing more 15 years ago than to focus on my day job, which
brings me to today. Today's ESI products are significantly
better than they were back when we were negotiating with our
broker, thanks to the ACA. At that time people were subject to
preexisting condition exclusions, coverage limits, cost sharing
for preventive services, and many other challenges that the ACA
eliminated.
When people lost their jobs, they also did not have the ACA
marketplaces to fall back on, and thanks to ARPA and the IRA,
the enhanced premium tax credits made that coverage even more
affordable. The difference cannot be more pronounced. As I
acknowledge, however, it is difficult for employers to
affordably provide that coverage.
Premiums, which have been growing faster than inflation and
wages over the last 25 years at least, are now close to
$9,000.00 for a person, or $24,000.00 for a family. Perhaps
even more troubling is the increase out-of-pocket expenses
employees are responsible for as employers, by shifting costs
onto them in the form of higher deductibles.
As a result, about 30 percent of workers are considered
underinsured.
This stubborn cost growth is primarily a function of high
prices. From 2017 to 1921, prices for health care services grew
at almost double the rate of utilization, and those prices are
primarily driven by two things. Consolidation, which in
particular drives up hospital prices, and exorbitant
prescription drug prices. Employers understand this, and they
want relief.
Close to 90 percent of surveyed business leaders believe
there should be a greater government role in providing coverage
and containing costs. They believe, correctly I might argue,
that a bigger government role would be better for their
businesses, and for their employees.
90 percent of business leaders want to see more government
intervention to increase transparency. We agree, and strongly
recommend congressional action to establish a Federal All-Payer
Claims Data base, or APCD, which could make health care claims
data available across payers and enable employers of all sizes
to make informed choices about which providers to contract
with, also encouraging providers to lower their costs.
More than 90 percent of those leaders want greater action
against anticompetitive behavior. That makes sense, considering
how problematic health care consolidation is becoming.
Consolidation can increase the price of hospital stays by as
much as 54 percent. Consolidation within the insurance market
is also rapidly increasing, as is consolidation across entity
types.
It may surprise you to know that United Health Group now
purportedly owns or is affiliated with 10 percent of all
physicians in the United States. That is 90,000 doctors, 20,000
of whom were acquired, or affiliated with United within the
last year alone. While largely outside of the scope of the
subcommittee, we strongly encourage congressional action for
more expansive monitoring of this kind of behavior.
To help lower drug prices, Congress can also build on the
historic Medicare prescription drug pricing reforms established
through the Inflation Reduction Act, and bring innovation, such
as the Medicare drug price negotiation program, and inflation
rebates to the commercial market, as the Lowering Drug Costs
for American Families Act would do.
These innovations are estimated to save the Medicare
program billions of dollars. There is also bipartisan interest
in lowering drug prices by closing the loopholes that are
regularly exploited by pharmaceutical companies, like patent
system abuses and stalling tactics to keep generics from
entering the market. We implore Congress to pass legislation to
do that.
We also encourage congressional action on bipartisan
proposals to regulate pharmacy benefit managers that profit
when drug prices are set as high as possible. I highlight a
number of those opportunities in my written testimony and
appreciate the subcommittee's engagement on this issue.
Finally, Congress can consider bolder reforms, for example
exploring the introduction of an employer public option as an
alternative to current ESI offerings. Congress has the ability
to provide relief employers want and need to help ESI's become
more sustainable and affordable for the years to come. Thank
you again.
[The prepared statement of Ms. Ducas follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Good. Thank you, Ms. Ducas. Now we will recognize
our final witness, Dr. Whaley, for 5 minutes for your opening
statement please.
STATEMENT OF DR. CHRISTOPHER WHALEY, HEALTH ECONOMIST, RAND
CORPORATION, PROVIDENCE, RHODE ISLAND
Mr. Whaley. Thank you. Chairman Good, Ranking Member
DeSaulnier, and members of the Committee, thank you for the
opportunity to testify today. My name is Christopher Whaley. I
am a Healthcare Economist at the nonprofit, nonpartisan RAND
Corporation, as well as an Associate Professor of Healthcare
Policy at the Brown University School of Public Health.
My research in general focuses on healthcare price
transparency, the impacts of evolving healthcare market
structures, importantly the role of employers who purchase
healthcare benefits, and many innovations that employers are
doing as purchasers of healthcare.
Employers play a significant role in the United States
healthcare 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 plant offerings employees select from, thus determining the
types of insurance that most Americans have.
Collectively, U.S. employers contribute about 1.2 trillion
dollars toward healthcare spending, and thus play an important
role in financing the U.S. healthcare system. Because
healthcare benefits are financed from wages, employers have
both a legal and a moral obligation to be responsible
fiduciaries when they are purchasing healthcare benefits on
behalf of their workforce.
Unfortunately, many employers face challenges fulfilling
this obligation. Many employers are unable to access their
planned claims data, limiting their ability to audit and
negotiate, or audit prices and negotiate on their behalf, as
well as prudently designed plan offerings.
Employers often face volatility in provider markets with
limited access to lower price, high-quality providers, due in
large part to decades of consolidation among providers and
plans, it has driven down competition. Prices paid by employers
are often high and variable, with little to no link between
price and quality.
However, 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 in 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 further by negotiation
of price discounts because providers gain member volume.
Due in part to these programs, Purdue has not had employer
premium increases in 5 years and has saved approximately 200
million dollars. Likewise, General Motors direct contract
program with the Henry Ford system in Michigan reduced
healthcare spending by an estimated 15 percent.
Other examples include reference-based pricing, which tie
reimbursement rates to benchmark rates, and it has also led to
considerable savings. For example, the referencing pricing
program implemented by the State of Oregon, has reduced
spending by about 100 million dollars for Oregon teachers and
public employees.
Due to reference pricing savings, the State of Montana
employee plan had no deductible or premium increases for
several years. Anecdotally, my father was a member of this plan
and certainly benefited from having his pay increase come in
the form of take-home dollars, and not healthcare dollars.
A critical component for an employer's ability to innovate
and implement these types of programs is the use of transparent
data on differences in provider price and equality.
Unfortunately, several self-funded employers who want access to
the plan's claim data, for monitoring purposes, have actually
had to file lawsuits to gain access to this type of data.
Additionally, access to hospital-insured posted price
transparency data required by Federal regulations, that allow
employers to comparison shop across providers and plans without
placing additional burdens on their members, have not been
widely useful.
This type of data, if further expanded, would allow
employers to benchmark their own prices against market rates.
In conclusion, whether they like it or not, U.S. employers are
in the healthcare business. To be responsible fiduciaries of
their member's money, employers need to use data to ensure
their healthcare benefits deliver high-quality care at
reasonable prices.
Federal policy can strengthen employer access to their own
claims data and improve compliance and useability of Federal
transparency policies and data. I am happy to answer any
questions and thank you for the opportunity.
[The prepared statement of Dr. Whaley follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Good. Thank you, Dr. Whaley. Under Committee Rule
9, we will now question witnesses under the 5-minute rule. I
will wait to ask my questions, and therefore I will recognize
Mr. Walberg from Michigan for 5 minutes.
Mr. Walberg. Thank you, Mr. Chairman, and thanks to the
panel for being here. A very, very, important subject we are
dealing with today. Ms. Josh, it is my understanding that
California Schools VEBA operates as an association health plan.
Last year House Republicans passed my legislation codifying the
Trump administration's 2018 rule to expand association health
plans.
How would expanding AHPs help reduce overall healthcare
spending among employers?
Ms. Josh. Thank you, Congressman, for that important
question. VEBA operates similar to an association health plan,
not exactly as an association health plan, but I think the
concept of increased market power is incredibly powerful.
Within VEBA, we have employers that have more than 15,000
employees down to our smallest employer that is a single room
schoolhouse with only three employees in the mountains of San
Diego.
What I think is most valuable about pooled purchasing is
that every employee, no matter which employer they participate
at, receives the high quality and lower costs of the broader
pool. We are also able to expand benefits and being able to add
additional services like enhanced mental health, enhanced
cancer screenings, expert second opinions.
It would be unaffordable or unreachable for small groups
outside of the pool.
Mr. Walberg. I appreciate that. That leads me to the second
question. The Biden administration recently proposed a rule to
repeal the Trump administration's rule. Their statement as to
the reason why they wanted to repeal associated health plans as
implemented by Trump is that AHPs are skinny plans.
You just mentioned some significant benefits that come in
your plans for your people. Is the Biden administration's
characterization correct, specifically does California Schools
need to skimp on coverage for its enrollees?
Ms. Josh. California Schools VEBA is incredibly proud of
the coverage that we offer for our employees. Almost none of
our employees have deductibles in their plans. They have a
$10.00 copay. Our view on healthcare has always been, if it is
unaffordable for the family to use it, the healthcare coverage
itself is practically useless, so we are very proud that we
have kept the quality very, very high.
I compare it to--my husband works for a small employer. My
out-of-pocket maximum for my family under my plan is only
$6,000.00 a year. His option at the small employer's,
$13,000.00 a year. We are able to offer significantly enhanced
benefits relative to what small employers are able to access.
Mr. Walberg. I would assume the next issue would be
positive for what you have experienced. I would assume AHPs, or
similar are effective at reducing healthcare costs without
skimping on coverage?
Ms. Josh. I believe with appropriate protections and
regulations group purchasing can be a very powerful tool in
producing market power for purchasers.
Mr. Walberg. Thank you. Thank you. Dr. Whaley, in your
written testimony you highlight that a ``plan and price data
are critical to health benefit innovation.'' In addition to
access to data, are there other barriers that limit the ability
of employers to implement direct contracting or similar
programs?
Mr. Whaley. Quite frankly, I think access to data is the
No. 1 hurdle, and without knowing what your own prices are,
what prices are in your market, it is really impossible for
employers to design these types of programs.
Second, I think where there is a will on behalf of
employers to act as responsible fiduciaries and recognize that
healthcare is a huge component of their business, and respond
prudently, and respond in the business focus fashion.
Mr. Walberg. What could Congress do to eliminate these
barriers?
Mr. Whaley. I think codifying that employers have access to
their own claims data if they are self-funded as a regular
employer, it would be critical and have access in a timely
manner. Second, I think expanding access to transparency and
coverage policies, and making sure that a hospital-posted data
is accurate and timely, and ensure posted data is widely
useable.
Mr. Walberg. I will jump quickly here, not much time left.
How does the use of telehealth in these models differ from
telehealth use in traditional fee for service care?
Mr. Whaley. What we have seen in published research studies
that were conducted is that providers that are paid in a non-
fee for service setting, where getting patients in the door is
the most profitable source of revenue, actually tend to use
telehealth more than providers that are paid in a capitated or
value-based manner.
Mr. Walberg. Good to know.
Mr. Whaley. Sorry, the opposite direction.
Mr. Walberg. Yes. Good to know. Thank you. I yield back.
Chairman Good. Thank you, Mr. Walberg. I would now like to
recognize Ms. Wild from Pennsylvania for 5 minutes.
Ms. Wild. Thank you, Mr. Chairman, and thank you to the
witnesses for being here for this important hearing. It is a
subject I have long been concerned about, even though I feel as
though we have made a lot of progress over the last few years,
health care costs are still too high for too many Americans.
Ms. Ducas, and am I saying that, pronounced okay, I was
very proud last Congress to support the Inflation Reduction
Act, which was signed into law in August 22, which as I
think everyone knows, dramatically lowers the cost of
prescription drugs for seniors on Medicare, and slashes
premiums for people who purchased coverage under the Affordable
Care Act, and of course caps insulin prices for millions of
Americans.
As I said initially, we have not done enough yet, and the
work must go on to lower these health care costs, particularly
I think for the millions of people who are covered through
employer-sponsored plans, and my biggest concern are items that
are not covered in those employer-sponsored plans, including
some preventive cares.
We know that a majority of Americans receive their health
coverage through a job-based plan, and we need to make sure
that their health care needs are being met. Can you give us an
example of some of the basic preventive services that are not
covered through many employer-sponsored plans?
Ms. Ducas. Thank you for the question. As you mentioned,
the Affordable Care Act had a provision that required the
coverage of essential health benefits which applied to the
group market.
Ms. Wild. Can you speak up just a tiny bit?
Ms. Ducas. Yes. Thank you very much. Thank you for the
question. As you mentioned, the Affordable Care Act had a
provision that required the coverage of essential health
benefits. What I would share, which include things like
colorectal screening, annual preventive service visits, but
what I would share is that there are many states who are able
to regulate insurance within their states, that pass laws that
require even more comprehensive coverage of different services.
Some examples might be, you know, assisted reproductive
technologies help.
Ms. Wild. You said assisted reproductive technologies?
Ms. Ducas. Yes. Thinking about--like IVF, but many, many
plans are self-insured plans that are subject to ERISA, and
therefore not necessarily subject to those enhanced regulations
that require even more access to services.
Ms. Wild. Right.
Ms. Ducas. There are a number of services that are not in
the essential health benefits, that would be especially prudent
for people to incorporate into more employer sponsored plans,
but I am happy to followup.
Ms. Wild. There are a lot of variances, you are saying?
Ms. Ducas. There are a lot of variances, yes.
Ms. Wild. Depending on the State and the employer and the
nature of the plan.
Ms. Ducas. That is exactly right.
Ms. Wild. Okay. I would like to turn to you, Dr. Whaley,
there is I think a growing bipartisan recognition that we do
not have enough information about costs and the health care
system. In your testimony you identify an important issue,
which is the lack of transparency from companies that contract
with employer-sponsored health plans to administer their
benefits, including pharmacy benefit managers and insurance
companies that serve as third-party administrators.
Can you share with us some of the challenges that plans
face when they are trying to get cost information from their
PBMs, or their third-party administrators, and as part of that
answer, could you address what the impact is on health care
costs?
Mr. Whaley. Yes. Some self-funded plans when they as 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 are
the one that is paying the bill does not have access to that
type of data.
I think not having that type of access to data does not
allow the employer to essentially monitor what's going on under
the hood and audit the prices that are being negotiated on
behalf of themselves, and more importantly, their workers. I
think having access to that type of data can greatly allow
employers to innovate and address prices.
Ms. Wild. Would you agree with me that as a capitalist
society, competition is important, and that without data on
pricing it is very hard for a consumer, whether it is a health
care plan, employer, whatever, to make sure that they are
getting the benefit of competition?
Mr. Whaley. That is correct.
Ms. Wild. Thank you.
Mr. Whaley. If we are going to have a system, we need data
and competition.
Ms. Wild. Thank you so much.
Chairman Good. Thank you, Ms. Wild. I would like to
recognize myself now for 5 minutes. Ms. Josh, we have heard
today already about the negative impact of consolidation in the
healthcare market and its affect on healthcare prices. How
would allowing employers, multiple employers, to pool together
to use one type of payment model help bring more competition to
market, and lower prices?
Ms. Josh. Thank you for that question, Congressman. I think
one of the things that we see is consolidation with the
healthcare purchasers, and the providers of healthcare whereas
individual consumers we have seen very fragmented, and trying
to negotiate against these behemoths on our own. By pooling
together the purchasing powers of employers, we start to have
the power of volume in negotiation.
When we talk about market power, part of where you really
get that market power is being able to go to a local hospital
system, and tell them you represent 10, 20, 30,000 of their
members to get more effective pricing, to get more access to
your data, to drive better primary prevention. The more in
different markets healthcare consumers can come together to
purchase together, the more market power you are going to have
against that consolidation, which will ultimately create
greater competition.
Chairman Good. Thank you. What other barriers need to be
lifted to ensure further access to voluntary employees,
beneficiary association plans, and similar employers pooling?
Ms. Josh. There are various requirements around it. One of
the existing requirements for VEBA is the type of employer that
can participate. We have had many small employers approach us
wanting to join and access these benefits, but based on the
VEBA regulations they cannot. There are also various State
regulations across the country that require--that will actually
look through an association to the underlying size of the
employers.
We would really be looking for a clear definition of the
areas of pre-emption for a purchasing group to be able to act
as that single purchasing entity to consolidate that market
power.
Chairman Good. Very good. Thank you. Dr. Whaley, your
research has identified provider consolidation as one of the
main drivers of healthcare costs. How would encouraging the
uptake of risk base and other payment models help address the
consolidated healthcare market?
Mr. Whaley. One of the things we have seen through
especially referenced based pricing and direct contracting is
that this is a model that allows for lower priced, high-quality
providers to essentially gain volume and gain patient revenue
through offering more competitive prices, and being a more
efficient provider.
If you are an independent provider who is efficient, then
these types of models actually allow you to remain independent
and promote more competition.
Chairman Good. Very good, thank you. In your written
testimony you also noted that large employers like General
Motors and Purdue University have created savings through
direct contracts with high value providers. What barriers do
smaller employers face in entering into similar contracts?
Mr. Whaley. Again, in some sense the main barrier to these
types of models is not the size of the employer, but the
ability and innovation or desire to innovate and recognize that
they are fiduciaries for their employees.
I think for smaller employers it is often hard to have the
market volume within a given market to essentially corral your
market power and to form these types of direct contracts, and
especially negotiate better prices.
I think other plans that allow employers to essentially
form co-ops or come together can help address that limitation.
Chairman Good. Very good, thank you. I would like to go to
Ms. Josh. We have heard today, I am sorry, I am going to go
to--actually I am going to go to Ms. Beehler. You talked in
your testimony about the transparency coverage regulation that
has helped you to get data that you need, but you still have
data access issues with claims administrators.
Can you explain why it matters for employers to have access
to data?
Ms. Beehler. Thank you for the question. It is very
important for employers to have access and transparency to that
data. Without it we are unable to recognize and see what is
happening on our plan.
When we received our claims data after 18 months of trying
to get it, we were able to find trends, find opportunities and
gaps in our plan, buy in areas in which we can go and direct
contract directly with providers to negotiate better pricing,
as well as follow through to make sure that our employees and
our family members are getting the best prices and the highest
quality.
Chairman Good. How about from the patient's standpoint? How
does it help the patients to have access to data? Why does it
matter for them?
Ms. Beehler. We partner both with educating our employees,
as well with all that we are learning from our aggregate data,
as well as providing tools to them such as healthcare blue
book, so that they can part and pair both quality ratings, as
well as price to make the best decisions for them and their
family, which directly impacts their out-of-pocket costs.
Chairman Good. Very good. Thank you so much. I would now
like to recognize Mr. Norcross from New Jersey for 5 minutes.
Mr. Norcross. Thank you, Chairman, and to the Ranking
Member for holding this hearing, and it feels like we are just
scratching the top grains of sand in a beach dealing with this,
but as we all know it has to start somewhere, and I appreciate
bringing this up.
Now we all know that access to health care is much more
than just that, particularly after coming through the pandemic
when so many of the mental health issues reared its ugly head,
not to of the least, which is the disease of addiction, which
has decimated and literally killed over 85,000 people a year,
but that all now gets lumped into this.
I hear from each of the testimoneys a variation of how, not
only trying to save money, but expand services. The very nature
of expanding services costs money, whether it is efficient or
not. If we go back 20 years the idea of what we are spending on
mental health as compared to today is just dramatically
different, and it adds, just as pharmaceuticals do, adds to the
top line.
Back in 2008 I believe it was, the Parity Act was passed,
which indicates to the insurance companies that you have to
treat mental health the same way you treat your physical
health. One of the issues with that is there is no upfront
enforcement of how we deal with that. Ms. Ducas, I just want to
talk to you.
We have introduced a bill in the past couple sessions
called About the Parity Enforcement Act, which instead of where
the incentive is now for an insurance company if they are
caught, and I use the term caught, not providing the proper
mental health, their penalty is oh, you will have to pay it
afterwards.
The fact of the matter is, great, we did not lose anything
because we would have had to pay it. By being able to give the
Department of Labor the ability not only to investigate, but to
levy fines up front on these issues, hopefully that will expand
mental health services, and certainly when we look at the
parity from health care, 85,000 people alone dying in just that
one sliver called addiction.
Will this make a difference? You are fighting increasing
access to services, but we are saving lives. Can you touch base
on the complexity of that?
Ms. Ducas. Yes, and thank you for the question. I really
appreciate it. You highlight a very significant issue, and I
would argue gap in coverage, behavioral and mental health
services are very, very difficult for people to access, even
with very good insurance.
Anecdotally, you know, many friends, family members, and
colleagues find it very challenging to use even their employer
sponsored insurance to find an in-network therapist, or
behavioral health counselor.
We know that only two out of three firms say that there are
enough mental health providers in their networks that they
offer to their enrollees, and 21 percent of firms, large firms
that offer behavioral health benefits, have limits on those
services.
There are many complex reasons for this. I think a lot of
behavioral health providers are largely incentivized not to
contract with insurance because they are paid less than other
types of physical health providers. As a result, people often
have to go out of network to be able to access either a
therapist, a psychiatrist, you know, what have you.
I think having stronger parity enforcement laws are going
to be critical, so that the onus is not on the employee or the
consumer reporting that they cannot access services to then
trigger an investigation into the insurance provider. Yes, the
short answer to your question is yes. It would make a
difference.
Mr. Norcross. Thank you. Dr. Whaley, could you expand on
this because gaining more access to lifesaving, and I am
focusing more on the disease of addiction is increasing cost to
the plan, but in the long term many people will suggest this
saves the plan money by giving you earlier access. You are not
going into more physical health care issues. Can you touch base
on sort of the two main issues we are dealing with?
Mr. Whaley. Yes. There are probably many areas in health
care where we have inefficient spending, so if you're trying to
get say a knee replacement and one provider charges $150,000.00
and the other charges $30,000.00, that's a huge increase in
spending with little to no quality improvement. There are other
areas where we have inefficient underspending, where we should
actually probably spend more and devote more resources.
It does include things like primary care, and I think
importantly mental health and addiction services.
Mr. Norcross. Thank you. I yield back.
Chairman Good. Thank you, Mr. Norcross. I would now like to
recognize Ms. Chavez-DeRemer of Oregon for 5 minutes.
Mrs. Chavez-DeRemer. Thank you, Chairman Good, for holding
this important hearing today, and thank you to the witnesses
for being here. Central to the issue of high-quality and
affordable health plans is transparency. To make the best
decision, small business owners need to better access what goes
into those costs they are being asked to pay.
Small businesses have enough on their plate. They should
not have to play games with anyone to get the full picture on
the cost of health plans they are offering their employees. I
have been proud to lead the bipartisan Health Data Act,
alongside Congressman Takano and Congresswoman Manning, which
is common sense solution to make it easier for employers to
choose affordable healthcare options.
It would strengthen the ability of plan sponsors to access
data from TPAs. Such reforms would make it easier for employers
to leverage their own data when designing innovative payment
models. Some PBMs and third-party administrators are using
loopholes to circumvent current law by one, limiting the number
of claims an employer can audit.
Two, limiting the number of audits an employer can conduct.
Three, demanding the audit be conducted by their own company.
Four, hiding indirect compensation received by the service
provider for its role in administering a plan.
Five, and demanding that the audit take place on the
service provider's premises. The Health Data Act would close
those loopholes. All of us were excited last month to see it
pass the House as part of the Lower Costs More Transparency
Act.
Ms. Josh, you have highlighted that increased transparency
from pharmacy benefit managers would allow employers to better
track their drug spending and make sure their payments are
being used well, squarely focused on care for their employees.
Could you expand on how the Lower Costs More Transparency Act
would help employers reduce those drug costs?
Ms. Josh. I thank you, Congresswoman, for that important
question, and I applaud you on the work that you are doing. I
think transparency is an incredibly critical issue here.
One of the ways we have really been able to use
transparency is understanding both our costs, as well as
partnering it with quality data from the Office of the Patient
Advocate in the State of California to be able to understand
the value of the providers that we are seeing. We think it is
really important that you pair both cost and quality together
to understand value so that we are able to encourage our
members and create opportunities for our members to select the
highest value providers.
Using that data we actually created a tiered network that
had lower patient costs and premiums for network one, where you
chose the highest value providers. If you were going to network
three, where the costs were 180 percent of the rest of the
county average, you actually paid 30 percent more in your
premiums, and you paid three times more at the time of the cost
of service.
Without access to our data that would have been impossible.
In our very first year it saved our participating employers
more than 50 million dollars, and delivered higher quality to
the members, and delivered great member satisfaction.
Mrs. Chavez-DeRemer. Great. Thank you. Dr. Whaley, I had a
question for you, but you have answered it. You are good to go.
I will not make you say it again, so I am going to go on to
Mrs. Beehler. Given your experience in developing innovative
healthcare models for employees, are there other policies
Congress should consider to promote employer innovation and
transparency in healthcare?
Mrs. Beehler. Thank you for that important question.
Essentially any policies that can expand access to transparency
of our data, and in a timely manner, will help employers be
able to use that information to share with their employees,
educate their employees, and make sure that they have
information they need to make good decisions for themselves and
their families.
Mrs. Chavez-DeRemer. For Congress, certainty oftentimes is
what you all ask us for, right? To lay the pathway. In the
healthcare industry on the personal side, I can tell you this.
If we are going to offer affordable healthcare, and we are
going to have the providers provide for that transparency is
key, which is what this hearing is about, so thank you for
being here today, and I truly appreciate the time that you have
given us today. With that, Mr. Chair, I yield back.
Chairman Good. Thank you. We would now like to recognize
Mr. Courtney for 5 minutes.
Mr. Courtney. Thank you, Mr. Chairman, and before I begin
my remarks, I would ask for unanimous consent to introduce an
article which was in the Hill yesterday, Obamacare Enrollment
Breaks Record for Third Consecutive Year, which again documents
the fact that they have now exceeded 20 million enrollees in
qualified health plans, which is 8 million higher than when
President Biden took office 4 years ago.
Obviously, the more generous tax credits, which does reach
some employees of the smallest of small businesses, is
providing obviously a real medical home and insurance home.
Chairman Good. Without objection, and you are now
recognized for 5 minutes.
[The information of Mr. Courtney follows:]
[GRAPHIC] [TIFF OMITTED] T6309.043
[GRAPHIC] [TIFF OMITTED] T6309.044
Mr. Courtney. Thank you. I would just like to followup with
Ms. Ducas, the question about prescription drugs and the impact
that it is having on employer health plans. Again, the State of
Connecticut Insurance Department just increased premiums this
year, and they noted the fact that as a percentage of premium
dollar from like even just 10 years ago, it has gone from 10
percent of premium dollar to over 20 percent, and it is headed
right toward 30 percent of premium dollars.
Again, the Inflation Reduction Act, which again has now put
into place a mechanism for negotiating lower prices for
prescription drug, the first tranche of ten medications is now
actively under consideration. There is a bill in Congress, H.R.
4895, the Lowering Drug Costs for American Families Act, which
would extend that mechanism to small businesses, to private
health plans, to working age Americans outside of Medicare.
That obviously would be a very beneficial impact, but just
again if you could talk about that a little bit because you
mentioned it in your written testimony.
Ms. Ducas. Yes, sure I would be happy to, and thank you for
the question. As you mentioned, the prescription drug price
negotiation, and the inflation rebates in the Inflation
Reduction Act are tremendous savings vehicles for the Medicare
program.
With respect to extending those into the commercial market,
one of the analyses for a similar bill, H.R. 3 found that
extending drug price negotiations into the commercial market
would increase Federal revenues by $45 billion over 10 years,
as a result of decreased subsidies provided by the Federal
Government. It would be a significant savings driver, yes.
Mr. Courtney. Great, thank you. Ms. Josh, I read your
testimony very closely. Again, it is a really impressive
program that is happening out there in California. You know,
you again alluded to the association health plans as a
potential way to again, expand pooling and lower costs for
drugs, but you did mention on page 14 that there has to be
appropriate guardrails in that type of mechanism.
Would one of those guardrails be that we at least make sure
that essential health benefits, which a lot of blood, toil, and
tears went into in terms of, you know, the implementation of
the Affordable Care Act, to make sure that quality health plans
are being sold, as opposed to what preceded the passage of the
Affordable Care Act.
Ms. Josh. Thank you for that important question. California
Schools VEBA has been really committed to making sure we have
high quality benefits. I think one of the keys of that in the
appropriate protections is that the members of our board are
fiduciaries to the individual members, so they have a legal
obligation to ensure that they are delivering high quality
value to the members under which they cover.
We launched our direct contracting pilot that required
legislation with the State of California to use a self-funded
plan that could use risk-bearing contracts. One of the items
within that bill was actually codifying the essential health
benefits that would be offered under those direct contracts to
ensure and codify that it continued to be high quality, and
that the fiduciaries were delivering their value to their
participants.
Mr. Courtney. Well, thank you for that answer because
again, you know, Mr. Walberg, who we have served together for a
long time, and I really respect him, but his bill actually
allowed for waiver of the essential health benefits in the
legislation that, you know, that the other side has been
pushing forward.
To me that is a step backward, and that is where, as a
former small employer, before I came to Congress. I mean I get
it, you know, that people really by themselves, if you have got
six or seven employees like I did, you know, you are helpless
in the marketplace. Pooling is good, but the fact is that we,
as you point out on page 14 of your testimony, if we are going
to go that route, we have got to make sure that we are at least
building in those safeguards and guardrails.
I hope that point is well understood and documented in
today's hearing because again, I think there is potential for
bipartisan movement on that type of issue, but again, we cannot
just walk away from protections for employees who are going to
be patients at some point with these health plans, so that they
are getting access to critical care, which was again identified
through the essential health plan rulemaking that took place
back in 2010.
Again, I am running out of time, but really quickly, you
mentioned that as a public option for employers, Ms. Ducas, as
again is something that Congress should look at. Can you
comment quickly?
Ms. Ducas. Yes, sure. We will be releasing a report in the
next few weeks outlining what the contours of that might look
like, but essentially it would be an alternative that employers
could offer, rather than their current ESI offerings. We
outline a number of different designations for that.
You would want to sort of have different tiers, preserve
employee choice. You have government negotiations. Yes.
Mr. Courtney. Thank you. More choice is good.
Ms. Ducas. Sure, more choices.
Mr. Courtney. Thank you. I yield back, Mr. Chairman.
Mr. Burlison [Presiding.] Thank you. The Chair now
recognizes Mr. Allen for 5 minutes.
Mr. Allen. Thank you, Mr. Chairman, and thanks for being
with us today and sharing your expertise. Dr. Whaley, as of
2021, Southern Company, located in my home State of Georgia, it
is the largest utility company in the U.S. in terms of customer
base. It is large size has afforded it the ability to stay well
below the national average in healthcare costs for the last 10
years, resulting in a cost avoidance of around 15 million
annually.
Major contributing factor to keeping healthcare costs low
for their employees has been their capacity to implement
innovative care models, such as muscular skeletal centers of
excellence, direct contracting through hinge help for muscular
skeletal, and onsite cancer screenings. Where unfortunately not
all of employers have the ability, expertise, or the resources,
particularly small businesses, to invest in innovative payment
models.
What types of employers have successfully implemented
direct contracting or other innovative benefit designs, and
what types of employers struggle to do so?
Mr. Whaley. I think the importance is less on the size of
the employer, but more so recognizing that they are
fiduciaries, and taking that obligation seriously. It may be a
challenge for smaller employers however, to design these
programs, and to scale these programs if they do not have a
sufficient number of patients.
There are, I think, many entrepreneurs who are trying to
fill this space, and essentially pool employer populations, and
do a lot of that work on behalf of employers.
Mr. Allen. What would be the impact for example in the
Affordable Care Act that carved out two groups that got waivers
and did not have to deal with the regulatory environment of the
Obamacare law. That was the labor unions and faith-based
organizations, which offer healthcare plans. If we were able to
carve out, employer-based insurance, and plus under ERISA allow
self-employed folks to participate, would that decrease costs
substantially?
Mr. Whaley. One example, a purchaser where you see lots of
innovation actually comes from labor unions. For example, on
the reference pricing program that I have studied in the
context of the California Public Employees Retirement System, a
lot of the impetus for designing that type of program actually
came from labor because they recognized that a dollar in
healthcare costs comes directly from a dollar in wages.
Mr. Allen. Right. Well, our Nation spends twice as much of
all the other countries average for healthcare, and the
taxpayers of this country in Fiscal Year 202023 spent 1.6
trillion on healthcare. Obviously, the healthcare cost is the
driver of our debt, which is now 24 trillion. We have got to
come up with something to compete with government healthcare.
There has to be two systems. We have seen employers figure
this out. In other words, if you leave it, like Ms. Josh, if
you leave it to the business community they are going to take
care of their folks. The reason we have health insurance in the
first place was because during World War II under wage and
price controls, the only way you could compete for employees
was benefits, and that is when healthcare was introduced.
Josh, if you are given the freedom, in fact, Mr. Whaley
before I leave you, do you know where the dollars are going in
healthcare?
Mr. Whaley. They go all over the place. To your question,
you know, one thing that employers have learned is that it does
not make sense to pay more for the exact same services that is
done in one setting versus another.
Mr. Allen. Yes.
Mr. Whaley. For example, Safeway decided to pay for
hospital, for laboratory tests done in independent settings,
and Medicare and others could learn from those types of sites.
Mr. Allen. Well, we are not going to reduce the costs of
healthcare until we know where all the money is going. At least
that is the way we do it in the business world. We take it
apart, and we say okay, what can we do, and why is this costing
so much money? All this started happening when the government
got in the healthcare business, and the government owns the
healthcare business today.
Ms. Josh, I have got 12 seconds, do you have anything to
add to that?
Ms. Josh. I think just for small employers the more market
power you can give them that they can come together, the more
able they are going to be able to access these individuals.
Mr. Allen. The only way to do that is association health
plans.
Ms. Josh. Or something similar.
Mr. Allen. Give them the same waiver, so they do not have
to fool with the government.
Ms. Josh. That they could design their programs to meet the
needs of their populations.
Mr. Allen. Yes, exactly. Thank you, and I yield back.
Mr. Burlison. Thank you. The Chair recognizes Mr. Scott for
5 minutes.
Mr. Scott. Thank you, Mr. Chairman. Ms. Ducas, we have
heard a lot about association plans. I just wanted to point out
that one of the benefits of the ACA is that essentially
everybody pays average. In an association plan you let a low-
cost group to pull out, which essentially causes everybody else
to pay more, and that is the fundamental problem with
association plans.
What happens when some groups can negotiate for lower
prices. Do we see other people's prices go up as we do in
association plans?
Ms. Ducas. Thank you for the question. Not that I am aware
of. In part, I think that has to do with transparency. It is
often difficult for one employer or business to know that lower
prices have been negotiated elsewhere when they have no access
to that information.
I would just underscore that you are correct in what you
shared about association health plans, and note that there was
an actuarial analysis that found that if the Trump
administration's association health plans rules had been
allowed to go into effect, the self-employed folks that would
have left ACA regulated markets, would have been significantly
healthier than those who stayed, and that would have caused
premiums to go up for those who were not able to leave the
marketplace.
Mr. Scott. Well, if an association formed and found that
prices would be higher than the ACA, nobody would buy it.
Ms. Ducas. That is right.
Mr. Scott. It would not work. The only ones that would work
were those that could save money, pulling out healthier people.
Everybody else on average, prices go up.
Ms. Ducas. That is exactly right.
Mr. Scott. There are other things we need to look out for,
and that is if a large group can negotiate with a hospital for
lower prices, it is one thing if they get lower prices. It is
another thing if they are the only ones that can go to the
hospital in terms of, and if you have a group of providers, if
it is an exclusive group just for them, that could affect the
availability for everybody else.
Can you say a word about what happens when you have these
different groups? I guess one would be that you cannot get
enough people in your group to cover all the ailments your
group may have, and so you are out-of-network.
Ms. Ducas. Yes. There because I will parse that question in
two different ways. One would be looking at the market power
that some providers have in terms of when they are contracting
and executing that market power. If they are the dominant
player in a particular place, often they will use
anticompetitive sort of contract terms that might say, hey, if
you want to contract with me and send your employers, and
release to me, you cannot send them to our competitor. If you
want to send them to see some of our providers, you have to
send them to see all of our providers, so there are a number of
opportunities to address anticompetitive behavior on the part
of very large providers, that's one piece.
To your other point around purchasers executing contracts
with these types of provider groups, it is very heavily
reliant, I think, to do this successfully and having a very
large number of enrollees that you can send there. If there is
anything else that would be helpful to expand on, I am happy to
do that.
Mr. Scott. Okay. The most I have heard about the problem
with essential benefits, again everybody is paying average, but
if benefits become optional, then only those that actually need
it will sign up for it. What would happen to maternal and child
care obstetrical services if that became optional?
Ms. Ducas. That is a very good question. We know that those
are two very expensive services, and that association health
plans are not required to cover essential health benefits, so I
would leave that speculation in the air, but you know, I think
if I were a plan and had a choice about what to cover, I would
look to potentially offload expensive services.
Mr. Scott. Well, everybody has to pay for a little bit for
obstetrical care now. Only people in childbearing age that
expect to have children and sign up for it and that would
become not insurance.
Ms. Ducas. Yes.
Mr. Scott. Prepaid obstetrical care, and essentially paying
the full value.
Ms. Ducas. Yes.
Mr. Scott. What did removal of the cliff do to the
attractiveness of association plans?
Ms. Ducas. Removal of the cliff was associated with many
more people on the Affordable Care Act marketplaces qualifying
for subsidies. We saw on average premiums go down about 20
percent for those folks who were on the marketplaces. Now, 80
percent of people in the marketplaces are able to access a plan
for less than up to $10.00 a month.
That obviously becomes a very attractive alternative when
you know that those plans are comprehensive, and cover all of
the benefits you're going to need.
Mr. Scott. People could get benefits instead of losing
them, about $100,000.00 for a family of four, almost
$200,000.00.
Ms. Ducas. Yes.
Mr. Scott. Still getting help. Thank you, Mr. Chairman.
Mr. Burlison. The Chair now recognizes myself for 5
minutes. Ms. Beehler, I understand that to direct contracts and
the centers of excellence come with they are encountering
geographic barriers issues because really it is the logistics
of having to create contracts with providers which ultimately
means that they are generally to more specific areas.
How do you recommend, or do you see any solutions to expand
outside of these geographic areas?
Mrs. Beehler. Thank you for the question. At SEL we have
put a number of things in place on our plans to help reach
geographical areas and expand services. First and foremost, our
onsite health clinic providers are able to consult with any of
our members across the country. They may not be able to
prescribe or diagnose, but they certainly can provide their
expertise and direct people in the right area.
In addition, we do also----
Mr. Burlison. Is there something that you would like to see
changed?
Mrs. Beehler. Absolutely.
Mr. Burlison. The providers of different states can
prescribe, and can diagnose and treat?
Mrs. Beehler. Provider reciprocity is a huge issue, and we
feel it having our own providers. We saw expansion of this
during the pandemic, in which many of those barriers came down
from that. We have seen a lot of State pacts come in place that
began to increase access, but the ability to do that much more
than just regionally is very important and would provide more
care to everyone.
Mr. Burlison. Are there any private solutions of
consolidating contracts with providers, so that it is easier
for an employer to directly contract through a group of
providers?
Mrs. Beehler. Yes.
Mr. Burlison. I mean we call these networks originally, but
they have kind of--but are there any of those within the direct
contracting model?
Mrs. Beehler. Yes, so their DPCs, direct providers have
begun to network together, so that you can access those
networks, and patients can access those networks, and be able
to be seen by providers that are licensed in the right area.
Mr. Burlison. Thank you. Mr. Whaley, in your testimony you
noted that the large employers like General Motors, Purdue
University, they have saved healthcare dollars through using
the direct contracts, specifically General Motors direct
contract with Henry Ford Health has lowered its healthcare
spending by 15 percent.
Purdue has saved over 200 million dollars and has not had
to raise the employee's premiums over the past 5 years. What,
as we continue the discussion, what barriers do you see for
direct contracting?
Mr. Whaley. I think that one barrier that could easily be
addressed is knowledge of both what your prices are now as an
employer, so these organizations were actually able to get
access to their data, and understand the prices that they were
paying. Then I think, just as importantly, understand the
prices across the market.
Mr. Burlison. Mr. Whaley, you do not think that they
understand what check they are writing?
Mr. Whaley. For most, employer's healthcare is a black box
in which they write a monthly check.
Mr. Burlison. Right.
Mr. Whaley. Have very little insight into the prices
negotiated on their behalf.
Mr. Burlison. Let me ask the question in a different way. I
think what is ironic, we have talked about price transparency,
but it is worth nothing if there is no choice available. Would
you agree?
Mr. Whaley. That is right.
Mr. Burlison. We are talking about transparency in pricing,
but I can think of most of the private sector that we do not
have to pass laws to force transparency because they are
competitive in their market, correct? We do not have to have a
law in place that says that gas stations have to put their
price in big, bold letters outside and on highways, but they do
it, right?
Mr. Whaley. That is correct. As I allude to in my remarks,
both decades of both provider and plan consolidation.
Mr. Burlison. I have got short time, but to me the answer,
the reason is that there is so much competition. They have got
a gas station across the street. In health insurance, how many
carriers are there in the United States?
Mr. Whaley. Well, there is a handful that dominate the
market.
Mr. Burlison. Five?
Mr. Whaley. Roughly.
Mr. Burlison. Five. The employer, while they can get all
the transparency in the world, if you have only got five
options available, what good is your transparency?
Mr. Whaley. I think that is certainly correct, as well as
on the provider side.
Mr. Burlison. I would contend we are trying to get the cart
before the horse. I think if you provide more choice, then
transparency follows. That is my contention. Let me ask this.
We were talking about a lot on the demand side. What about the
supply side? Do you study, you know, other states, sort of
State to State they have occupational licensing laws,
certificate of need laws, things that ratchet down the
availability of healthcare.
Are there states that do a better job at that, and their
prices are lower?
Mr. Whaley. I think states without certificate need laws in
general have more access and more choice, and lower prices.
Mr. Burlison. Thank you. My time has expired. I now
recognize Ms. Manning from North Carolina for 5 minutes.
Ms. Manning. Thank you, Mr. Chair. Thank you to our
witnesses for being here today to discuss this critically
important issue. I was very proud to support the Inflation
Reduction Act in the last Congress, which helped lower costs of
prescription drugs for people on Medicare, by capping the cost
of insulin, and for the first time allowing the Federal
Government to start negotiating for lower prices for certain
prescription drugs covered by Medicare.
This was an important step, but it is not enough. I am
proud to have introduced the Health Data Access Transparency
and Affordability Act, with Representatives Chavez-DeRemer, and
Representative Takano, which passed this Committee with
bipartisan support because there is agreement that greater
transparency will help employers and consumers make better
health care choices.
Mrs. Beehler, have you been able to use health care data
that you have been able to access in administering your
employer-sponsored group health plan to lower costs and improve
quality?
Mrs. Beehler. Yes, we have. We have had a number of
examples both within pharmacy, as well as within our own,
bringing in our own health care clinics, and being able to
provide our service in-house, and direct contracting with local
providers.
In addition, in our communities, and where we know that
there are huge price discrepancies. For instance, advanced
imaging is an area, especially in rural communities, where we
pay a much higher price than you would see in a non-rural
community. Using that information, we were able to direct
contract with our local hospital and in 1 year we will save
over $200,000.00 in advanced imaging alone.
Ms. Manning. Greater transparency is one avenue for helping
employers and consumers reduce their health care costs. Ms.
Ducas, as you pointed out in your testimony, despite the
efforts that we have made with the ACA, the IRA, and hopefully
we will make with increased transparency, prescription drug
prices have nevertheless continued to rise. While this
Committee has largely focused on PBM's anticompetitive
practices, and how they increase costs for employers, it seemed
to be a bit of a shell game that we were talking about at the
last hearing.
I think we should also be looking at other points along the
pharmaceutical supply chain to lower costs, including the drug
manufacturers. You have mentioned that other countries have
lower costs for drugs, and in some cases better health outcomes
than in the U.S.
What are some of the tactics that peer nations are using to
rein in drug prices beyond price negotiation with
manufacturers?
Ms. Ducas. I would say a key one is price negotiation and
caps. I mean that is critical. Without that, there is little
opportunity to bring pharmaceutical prices down. There is a lot
of asymmetrical information when it comes to drug
manufacturing, and there is also a lot of consolidation and,
not consolidation, but concentration in the market of the
suppliers of the materials that go into producing a drug, the
manufacturers who produce the drugs that are invented, you
know, by pharmaceutical companies.
What I would point to is that the primary vehicle for
success in other places is their ability to directly negotiate
prices.
Ms. Manning. In your testimony, you mentioned that one
barrier to lowering costs of employer-sponsored health plans is
certain anticompetitive contract terms that inhibit plan
designs that could lower costs for consumers. These include
all-or-nothing clauses, anti-tiering and anti-steering
provisions, and other restrictions.
If these contract provisions are harmful to workers and
raise costs, why do employers or health care plans agree to
them?
Ms. Ducas. That is a great question and thank you for it.
The primary reason is because of the outsized market power that
the providers that are bringing these contract terms to the
table have. If you are the one game in town, if you are the big
name in town, it is a credible threat to be able to say that if
you want a contract with us, you have to play by our rules.
If you are not in the network that you are offering your
employees, that is being offered to your employees, if the
biggest hospital, or the biggest, most recognizable hospital in
a particular place is out of your network, your employees are
not going to be happy.
Ms. Manning. What is the solution to that?
Ms. Ducas. Greater regulation of anti-competitive behavior.
Ms. Manning. Thank you. My time is about to expire. I yield
back.
Mrs. Foxx [Presiding.] Ms. Hayes, you are recognized for 5
minutes.
Mrs. Hayes. Thank you. Health care costs in the United
States are the highest in the world, accounting for 4.5
trillion in 2022. In my home State of Connecticut, we ranked
9th in the country for per person health care spending.
Employer premiums in Connecticut are significantly higher than
the national average.
Individuals covered by private health insurance plans,
including employer-sponsored plans, are billed at rates much
higher than what Medicare, Medicaid, and other public programs
pay for the very same services. Ms. Ducas, why is it so
difficult for employers to reduce how much they pay for health
care?
Ms. Ducas. Thank you for the question. A large reason for
that is not having sufficient market power to be able to push
on that. You are correct that on average commercial insurers
pay significantly more than Medicare for the same services.
There can be pretty tremendous variation, one my co-witnesses
has done a lot of research into this in more, in states with
more competitive markets, you see less of a differential.
To answer your question, when you are negotiating on behalf
of a very large pool of individuals, as you are with the
Medicare program, you can achieve greater economies of scale.
Mrs. Hayes. What can we as policymakers do to lower the
cost for Americans covered by private insurance?
Ms. Ducas. I think one of the things that we could do is
level the playing field between purchasers and providers, and
as we have discussed there is heavy consolidation in the health
care provider market, and also in the insurance market. One way
to do that is to tamp down on that behavior, reduce the market
power that those entities have, which tip the scales a little
bit more in the favor of private purchasers.
Then another issue, as I have mentioned, is prescription
drug pricing. Doing more to regulate prescription drug price to
bring those down, to make it more affordable for employers to
be able to offer coverage, that covers those comprehensibly.
Mrs. Hayes. Absolutely, and I think that this Committee and
the Congress are uniquely positioned to do that, and not leave
it up to employers to have to try to figure that out on their
own.
Ms. Ducas. Yes.
Mrs. Hayes. I can tell you that House Democrats have been
dedicated to addressing the health care crisis for over a
decade, and as we have heard over, and I am sure you are aware
of, the U.S. Department of Health and Human Services announced
yesterday that more than 20 million people have selected an ACA
health insurance marketplace plan enrollment. I have seen the
numbers in my State skyrocket.
There is a record number of enrollments all around the
country, so while there are still issues that we have to
address, the plan is working. As you mentioned in your
testimony, the ACA improved health care benefits and
strengthened consumer protections for more than 178 million
Americans and employer-sponsored insurances.
Ms. Ducas, you also mentioned additional action to address
the underlying drivers of health care cost growth. What are
some of the most important consumer protections under the ACA
that have made coverage more affordable, and how can we
continue to buildupon that work today?
Ms. Ducas. Thank you for the question. Some key ones, we
are getting rid of annual and lifetime limits. Prior to the
ACA, there were about 105 million people who were in plans that
had lifetime limits, and 20,000 people hit those limits each
year, so for those folks, the Affordable Care Act meant the
difference between bankruptcy and financial solvency.
I would say another key protection was also enabling
dependents to stay on their parents plan up to the age of 26,
which made affordable health coverage possible for a lot of
young adults in this country. Also, the provision of essential
health benefits was fairly key. I mean it is a night and day
difference today.
Mrs. Hayes. Yes.
Ms. Ducas. In terms of what you are able to purchase either
on your own, or through employer-sponsored insurance thanks to
the ACA.
Mrs. Hayes. Well, thank you. I appreciate that, and this is
an ongoing debate. We have heard in the last week on everyone's
platform a resurgence of conversations about the Affordable
Care Act, and the benefits or lack thereof, the plans. As my
grandmother would say, do not throw out the baby with the bath
water.
We have to figure out what works in the plan. Many of the
things that you just said, and then improve upon the things
that do not work, but I think it is a dangerous proposition to
go back to a place where we are insuring less people and not
more in the United States of America. With that I yield back,
thank you.
Mrs. Foxx. Thank you, Ms. Hayes. I now yield myself 5
minutes. Dr. Whaley, in your written testimony you descript
your research as ``studying innovations that employers are
making when they have access to price information.'' As you
know, the House recently passed the Lower Cost More
Transparency Act, which gives employers greater access to their
own data to price information.
How will this legislation benefit employers who are
engaging in innovative payment models?
Mr. Whaley. What we have seen so far is that it is really
the frontier employers who have been able to get access to
their own data. I think that is largely just because
traditionally it has been such a herculean task to get access
to data. I think expanding employer access to claims data, as
well as having market comparisons through the transparent and
coverage policies, will actually allow more employers to
participate in these types of innovations.
Mrs. Foxx. Thank you. Ms. Josh, I am very impressed by
California's VEBA's ability to reduce costs for workers while
maintaining robust access to high-quality benefits. Your
written testimony states that VEBA faced challenges standing up
its direct contracting model because of restrictions on the use
of risk-bearing contracts in your State. Can you elaborate on
the regulatory challenges you faced when implementing VEBA's
direct contracting pilot programs?
Ms. Josh. Thank you for the question, Chairwoman. It is one
of the items that we think is critical when you look at
innovation is aligning the incentives of the health systems and
the provider groups with those of the purchasers. Really, at
the end of the day, that is how are we both investing toward
making the population healthier and ensuring they have the
services that they need.
One of our key tools is called capitation, which is a risk-
bearing contract that allows the group to also take downside
risk, as well as upside risk in the management of a population.
In the State of California, if you are to direct contract, you
can only do it on a fee-for-service basis. We were required to
run special legislation to be able to get the ability to run a
pilot to use capitation in direct contracts.
Fortunately, it has been a 5-year journey. We have
successfully enrolled members in that starting January 1st. For
others to access it, both in California and outside of
California, we would be looking, and hope for support in
clarifying the ability to use those contracts on a direct
basis.
Mrs. Foxx. Thank you. Ms. Beehler, in your written
testimony, describe challenges obtaining claims data and
navigating the complexity of our healthcare system in creating
new benefit designs. Could you elaborate on these challenges,
and how they have affected your efforts to improve healthcare
access and affordability?
Ms. Beehler. Thank you for the question, Chairwoman. Our
attempt to get claims data started years ago. Really, since the
passing of the No Surprise Act were we able to make any
traction, but still, at SEL we went through an arduous process
that lasted over 18 months while we tried to get our claims
data, both in discussions with our third-party administrator,
as well as back and forth with data submissions that were not
complete in nature.
This should not be the norm. That should not be the
expectation. Also, during this process we were informed by our
TPA that we were the first one in our State that had asked for
this level of data, and that also should not be the norm.
Mrs. Foxx. Well, thank you very much. I am in a rare
situation where I can yield back time. I now recognize the
Ranking Member, Mr. DeSaulnier.
Mr. DeSaulnier. Madam Chair, I will take your time.
Mrs. Foxx. Okay.
Mr. DeSaulnier. No, no, I am only kidding. Thank you so
much. Thank you all for being here. I cannot help but think of
the possibilities that we have to work together on evidence-
based research, Dr. Whaley, that you have been involved with
that is bipartisan that improves life for consumers.
I made a comment about innovation, being a member from San
Francisco Bay area, and then dealt with innovation with tech
industry. It was a wonderful thing until people whose vested
interest was primarily return on investment for the investor,
without a consideration for the consumer, and then innovation
just became an excuse, in my view, for some of the down sides.
Pardon me for that editorial comment. Ms. Ducas, maybe you
could just briefly talk about some of the things that we could
do based on what you have heard at this hearing with the
Affordable Care Act right now to improve the quality of care.
That balance between quality assurance and cost.
Ms. Ducas. Sure. Thank you for the question. Well, I think
we have heard a lot about the need for transparency, and for
employers and others to be able to actually see how much they
are spending on care, where their money is going. One of the
things that I highlight in my testimony, would be to establish
a Federal All-Payer Claims Data base, that would allow everyone
to be able to see what their claims look like across payers,
and would essentially be a place for both self-insured and
fully insured employers to go, and to bring their data into as
well.
I think also looking to--we talked a bit about the enhanced
premium tax credits. It would be great to see those made
permanent, given the impact that they are having on the
Affordable Care Act marketplaces. Then I think in addition to
building on the ACA, Congress has a key opportunity to build on
the IRA and the prescription drug pricing provisions and
inflation rebates therein, sending those to the commercial
market, and making those really powerful tools work for
everyone in this country.
Mr. DeSaulnier. Thanks. Ms. Josh, thank you for all your
great work. As a Californian, albeit from Northern California,
you have a unique partnership where you have CTA and
administrators working together. The challenge--and you
mentioned you avoid high deductible, that question is for you
to elaborate on that, but also the quality assurance.
Yesterday I got a call from a dear college friend who has
literally a family practice he inherited from his father. He
was telling me about how difficult it is for him as a primary
care physician, where his clients will come in, they have
health insurance, and then they spend hours, both staff and his
patients, trying to get what they believe the insurance company
is required to give them for prescriptions.
Then they go out, and they give up and they pay out of
pocket. How do you handle that in addition to high deductible?
Ms. Josh. On the cost, like I said earlier, we have always
believed that our members need to be able to afford to go to
see the doctor. We cannot give them a health plan, and we are
covering gardeners, bus drivers, lunchroom workers, who make
$30-40,000 in California. It is important to keep the cost of
coverage really effective for them.
We drive that through high quality. One of the things that
California is very, has a great advantage on, is the Office of
the Patient Advocate, which is run through the State of
California. It is an independent quality monitoring tool that
we can use because we often see if someone has skin in the
game, if it is a carrier or someone else determining the
quality, you can get differing messages.
What we really like in having that independent quality
measure is that there is no incentive to drive business or
membership one place. We really encourage access to that data,
access to that quality information, to be more broadly
available, because it has been very useful in California.
Mr. DeSaulnier. I remember it well. As a former Chair of
the Budget Subcommittee on Health Care in the State Senate. Mr.
Whaley, you mentioned Safeway. I have a constituent who is a
former CEO of Safeway, Steve Bird, talked to him many times
about prevention.
We had some difficulty with some of our friends and retail
clerks over that, but can you talk a little bit about
prevention, and to the degree you could include behavioral
health, which was also a big issue for, those, contract
negotiations.
Mr. Whaley. As I mentioned earlier, there are probably many
areas in health care where we spend too much and spend
inefficiently, but at the same time, there are many areas such
as prevention and particularly mental health and addiction
services where we probably spend too little, and I think it's
actually important for the health of employers and populations
to actually spend more and devote resources to those services.
Mr. DeSaulnier. Thank you, Madam Chair, and I will
gratefully now give you time back. I just gave you 3 seconds
back, Madam Chair.
Mrs. Foxx. Thank you.
Mr. DeSaulnier. It is a biblical number.
Mrs. Foxx. You do yours and I will do mine.
Mr. DeSaulnier. For any newcomers, this is a comedy routine
we have. We both think it is funny, I do not know if anyone
else does. Thank you, Madam Chair, and again thank you for you,
Chairman Good, and the witnesses.
I think this could be a really productive hearing. It is in
the best interests of American consumers. I am shocked that, in
spite of everything, we are still at almost 18 percent of GDP
in terms of percentage of GDP as health care costs, and we do
not have the outcomes that would, in spite of everything that
we have tried to do, as opposed to our global competitors, who
I think the Japanese are the next closest, and it is 10
percent, and they have better outcomes.
We can do things that extend people's lives in this country
if we work together. Madam Chair, I would like you to ask
unanimous consent to enter the following documents into the
record. A letter from the California Public Employees
Retirement System, and a letter from the American Federation of
County, State, Municipal Employees.
Mrs. Foxx. Thank you, Mr. DeSaulnier. I ask unanimous
consent to submit the following letters into the record. From
Transcarant, ATA Action, ERIC. Purchaser Business Group on
Health, and the Partnership to Advance Virtual Care. Without
objection, so ordered. Without objection on yours.
[The information of Mr. DeSaulnier follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[The information of Mrs. Foxx follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. DeSaulnier. No. Unless you want me to continue to talk
Madam Chair, I am happy to yield back.
Mrs. Foxx. That is all right.
Mr. DeSaulnier. I thought you would say that.
Mrs. Foxx. Well, as you can tell Mr. DeSaulnier and I get
along very well, and this is a very bipartisan issue and we
have worked very hard in this Committee, and I am particularly
proud as the Chair, and the Ranking Member has already left,
but we have really worked closely on this issue.
Now I will share my prepared remarks. Healthcare costs
continue to be a major threat to employers, employees , and our
economy. As premiums and healthcare spending continue to rise
at unprecedented rates, innovative solutions are needed that
will provide higher quality healthcare at more affordable
prices. As we have learned today, businesses are the innovators
who can solve these challenges, not government mandates.
By investing in new payment models like direct contracts,
high performance networks and centers of excellence, the
employers our witnesses represent, have proved to be effective
models for a new future in healthcare. Despite their successes,
we know that there remain barriers for innovation in
healthcare.
Access to data, overzealous State regulators, oppressive
bureaucracy, administrative burdens, and accurately measuring
performance remain challenges employers face in improving their
health plans for their employees. We cannot afford to keep the
status quo.
It is our job in Congress to help expand innovative options
broadly across the country. Congress can clarify ERISA's pre-
emption to help insulate employers from overbearing State
regulations. Congress can establish meaningful cost and quality
benchmarks to help employers maximize their plans values, and
Congress can build off of the great work of the Education and
Workforce Committee to strengthen healthcare price transparency
and codify the transparency and coverage rule in the law.
I look forward to working with members of this Committee to
tackle these challenges. Again, I thank the witnesses for
participating in today's hearing, and I yield back. There being
no further business to come before the Committee, the
Subcommittee, we stand adjourned.
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[Whereupon, at 12:01 p.m., the Committee was adjourned.]
[all]