Employers need healthcare price transparency

To combat this lack of information, a number of companies have sought out independent health care shopping tools to help employers and employees compare the costs, quality, and convenience of their different health care options. These products allow consumers to compare their health costs for various procedures, and choose the providers that offer high quality yet cost-effective care. For employers, using these health care shopping tools to make the cost of care more transparent is a logical solution to rising costs: by giving employees the tools they need to choose the care they value, businesses can avoid paying unnecessary costs and, as a result, continue to provide the health care coverage their employees deserve.

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However, in order to take advantage of these transparency tools, employers need cooperation from their health insurer to access to their paid claims data – essentially the receipt for the medical care employers and their employees purchase. Once the employer obtains these files, the data can be aggregated and provided to employees to estimate the cost of future health care by various doctors and medical service providers. Since employers’ health plans regularly provide these medical claims receipts for other purposes, such as the development of company wellness programs, you would think they would also readily provide the information for transparency solutions that lower medical costs and combat premium growth. Unfortunately, you would be wrong.

In fact, some health plans have refused to share this data, citing “proprietary” information and preexisting confidentiality agreements with providers that promise to keep prices and quality secret from their members.  In some cases, they also agree to never steer members away from the highest cost providers. Ultimately, however, these excuses are a cover for health plans’ real concern: to keep health care purchasing decisions as opaque as possible to substantiate excessive administrative costs, and maintain the illusion of well-managed networks and large discounts.

The refusal to share claims is also a business choice to stifle competition. Several health plans are racing to develop their own health care shopping solutions and use their monopolies to force members to use their proprietary products.  Health plans should not be able to exert their power to preclude innovative ways to create a more effective, value-conscious, and competitive market.  To date, plans have failed to create competitive healthcare markets and control cost growth; relying on them to develop price and quality transparency is a fool’s errand.

To be fair, some employers, who have long enabled employees to consume health care without regard to value, do have complicity in fostering an opaque health care market. However, a growing number of employers recognize that transparency is needed to change the unsustainable dynamics of the health care industry. Unfortunately, many of these employers are being blocked by health insurance companies that benefit from keeping things the same. Consumers and employers are the ones footing the bill for health care costs and should have the power to choose the health care services that are right for them.

As the vice president of benefits for a company that has seen firsthand the power of price transparency to lower costs for businesses, I know that a transparent health care marketplace is the rare solution that can lead to both lower total costs and better quality care for consumers. The demand for transparency and accountability for health care costs is growing stronger by the day, and health plans would be wise to embrace it or be left behind.

Shawn Leavitt is the vice president of Global Compensation and Benefits at Carlson, a global hospitality and travel company. Headquartered in Minneapolis, Minn., Carlson encompasses 1,070 hotels in 80 countries; 909 restaurants in 60 countries.