More than 150 million workers, retirees and their family members get their health care through employment-based coverage, which is the backbone of this country’s health care coverage and financing. About one-third of employment-based coverage comes through union-negotiated plans.
However, soaring costs threaten the survival of employment-based coverage. The average annual premium for single coverage in employment-based plans in 2011 was $5,429. For family plans it was $15,073—an increase of 113 percent over 10 years. If family coverage premiums continue to grow as they have over the past seven years, they will average $23,793 in 2020.
As a result, more and more businesses have either dumped health coverage altogether or shifted more costs to workers.
- Only 60 percent of employers offered health coverage in 2011, down from 66 percent in 1999.
- Employers are paying less of the cost of premiums. From 1999 to 2011, premiums for family coverage rose an average of 160 percent, while workers’ share jumped 168 percent.
- At firms of all sizes, employers doubled annual deductibles between 2003 and 2010.
- Employers are rapidly moving to high-deductible plans; in the past five years, the number of workers with annual deductibles of $1,000 or more for single coverage shot up from 10 percent to 31 percent among all size firms, and to 50 percent in small firms
Through collective bargaining, union members and their households have fared far better than nonunion working people, resisting much, though not all, of the cost-shifting demanded by employers. But the result has been lower wage increases and the loss of good jobs, as employers switched to lower cost contract employees or simply sent the work overseas.
Unions are at the forefront of the efforts to preserve good health benefits as part of workers’ compensation packages, while continuing to push for national health care. Through the collective bargaining process, unions and employers can adopt a set of cost containment techniques as alternatives to cost-shifting. These include the following:
- Negotiated discounts on drug costs. A number of national unions have negotiated national drug price agreements for their local unions and the AFL-CIO is now working on a single, national agreement that would be available to all unions.
- Strong care coordination for patients with chronic conditions and patients being discharged from hospitals.
- Use of health risk assessments among workers and family members. Each person’s health status and risk factors are unique. Identifying potential problems and charting a course to good health require adequate risk assessment and screening to make appropriate preventive treatments and drug therapies possible.
- Screenings and tailored disease prevention to monitor high-risk areas and develop prevention programs to reduce the likelihood of disease.
- Value-based benefit design. Instead of requiring workers to pay more, the benefit package can be structured to eliminate cost-sharing for high-value screenings and preventive treatments.
- Use of high-value providers. Even expensive treatment centers can be part of a cost-saving plan if they deliver high-quality care because they can reduce the likelihood of serious medical errors with costly consequences, including harm to patients. But big-name facilities aren’t always the best, and some hospitals that perform well in some areas don’t have such good results with other procedures or treatments. The Joint Commission, the leading hospital accrediting organizations, ranked 14 percent of accredited hospitals as “top performers” based on their performance. It is important to identify the best health care organizations for each high-cost treatment and encourage plan members to use those hospitals.
- Follow Medicare’s lead and adapt payment and delivery system reforms mandated by the Affordable Care Act to private purchasing. By following Medicare’s lead and adapting payment and delivery system reforms to private purchasing, unions and employers could see significant savings. While not all of these have potential application in private insurance, a significant number do, including:
- Switching from paying for volume to paying for value. Five years from now, 9 percent of Medicare payments will be based on how well hospitals perform on standardized quality measures. By contrast, currently less than 1 percent of private payments are value-based. Private purchasers have long wanted to switch to this system, and a few small but encouraging examples do exist. But the opposition of the health care and insurance industries has thwarted any large-scale shift in this direction.
With the country’s largest purchaser, Medicare, leading the way, an unprecedented opportunity exists for private purchasers to follow suit. Having Medicare switch to value-based payments will spur efficiencies that will benefit private purchasers to some extent, even if we take no action. But the Affordable Care Act calls for coordination of public and private purchasing in implementing payment reform, and the Obama administration strongly supports close alignment between public and private purchasers.
While the concept of following Medicare’s lead in purchasing on value is simple enough, numerous barriers—from anti-trust law to the market power of large provider networks—stand in the way. Unions and employers need to band together to have the clout to bring payment reforms into private purchasing. An effort is now under way among national unions, large multiemployer trust funds and the largest health business groups to do just that, and a “Buying on Value Toolkit” will be available on this website early next year.
- Promote the use of patient-centered, integrated care practices. Another way unions and employers can apply the changes that the Affordable Care Act is making in Medicare is to encourage workers to join enhanced primary care practices, often referred to as “patient-centered medical homes” or “medical homes.” These practices are paid extra to coordinate the care of all specialists a patient needs, to emphasize prevention and wellness and to offer 24/7 contact with physicians or other clinicians. They are now available in most local areas, they have proven very popular among patients and they commonly succeed in reducing emergency room use and hospitalization by 30 percent or more, diagnostic tests and other ancillary costs by around 20 percent and overall costs by 10 percent.