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December 20, 2023
David Burda
Economics Outcomes Policy

Businesses’ Growing Appetite for Healthcare Regulation

By definition, employers don’t like any type of regulation of their business practices. Complying with regulations adds to their costs. The regulations themselves prevent them from doing things to cut their costs or increase their revenue that could put workers, customers and the general public at risk.

Yet, employers don’t seem to mind regulation when it comes to sectors of the healthcare industry that they blame for increasing their healthcare costs.

That’s my interesting twist takeaway from the National Alliance of Healthcare Purchaser Coalitions’ latest Pulse of the Purchaser report released last week. The 25-page report is based on a survey of 172 private and public employers.

The surveyed employers are getting pretty testy about how their increasing healthcare expenses are affecting their business performance. To wit:

  • 91% said rising healthcare costs are impacting their organization’s competitiveness.
  • 91% said higher healthcare costs will result in further cost-shifting to employees.
  • 82% said healthcare cost increases often lead to tradeoffs with salary or wage increases.

The answer to employers’ healthcare cost problem is regulation. Asked whether they would support the following policy reforms to make their healthcare costs more affordable and improve the value of their healthcare spend, here’s what they had to say.

  • 83% said anti-competitive practice regulation would be “very” or “somewhat” helpful.
  • 83% said surprise billing regulation would be “very” or “somewhat” helpful.
  • 81% said antitrust enforcement would be “very” or “somewhat” helpful.
  • 81% said pharmacy benefit manager reform would be “very” or “somewhat” helpful.
  • 79% said drug price regulation would be “very” or “somewhat” helpful.
  • 73% said hospital rate regulations would be “very” or “somewhat” helpful.
  • 61% said health savings account reform would be “very” or “somewhat” helpful.

That’s a lot of “very” or “somewhat” helpful federal government regulation.

“Employers are frustrated that the healthcare system is designed to enrich the middlemen and is not delivering improvements in affordability, access or quality for purchasers or employees and their families,” said Michael Thompson, president and CEO of the National Alliance, in a prepared statement. “Increasingly, the fox is guarding the henhouse, and both are exploiting a dysfunctional system at the expense of making it better. Employers are starting to take actions, both on the market and policy fronts, to realign the system to reduce conflicts and improve value.”

We’ve heard tough talk from employers for years about what they’re going to do to make their healthcare costs more reasonable and more valuable. That’s not new. What is new is how open they are to government regulators stepping in.

In fact, their growing appetite for government healthcare regulations is reflected in how little interest they have in market-based solutions like direct contracting. Only 20% said they are directly contracting with healthcare providers for care with another 29% saying they might consider it within the next three years. Fifty-one percent said they are not considering direct contracting at all.

You know it’s getting bad when you hear the business community say let the government do it. That’s scary.

Thanks for reading.

About the Author

David Burda

David Burda began covering healthcare in 1983 and hasn’t stopped since. Dave writes this monthly column “Burda on Healthcare,” contributes weekly blog posts, manages our weekly newsletter 4sight Friday, and hosts our weekly Roundup podcast. Dave believes that healthcare is a business like any other business, and customers — patients — are king. If you do what’s right for patients, good business results will follow.

Dave’s personnel experiences with the healthcare system both as a patient and family caregiver have shaped his point of view. It’s also been shaped by covering the industry for 40 years as a reporter and editor. He worked at Modern Healthcare for 25 years, the last 11 as editor.

Prior to Modern Healthcare, he did stints at the American Medical Record Association (now AHIMA) and the American Hospital Association. After Modern Healthcare, he wrote a monthly column for Twin Cities Business explaining healthcare trends to a business audience, and he developed and executed content marketing plans for leading healthcare corporations as the editorial director for healthcare strategies at MSP Communications.

When he’s not reading and writing about healthcare, Dave spends his time riding the trails of DuPage County, IL, on his bike, tending his vegetable garden and daydreaming about being a lobster fisherman in Maine. He lives in Wheaton, IL, with his lovely wife of 40 years and his three children, none of whom want to be journalists or lobster fishermen.

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