Employer health care costs are rising…and we need Congress to help
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When Congress returns from August recess, attention will likely turn to tax reform. But no discussion on tax reform can proceed without considering the tax-related aspects of health care policy; in particular, the positive impacts to the health care marketplace of eliminating the excise tax on health benefits, preserving the current tax treatment of employer-sponsored health benefits, eliminating the health insurance tax and expanding the use of health spending accounts.

Americans deserve an efficient, effective and equitable health care system that nurtures a healthier, more prosperous nation. Stakeholders across the spectrum—employers, insurers, labor unions, providers and Congress—need to work together to institute strategies that ensure quality care at a reasonable cost.

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Employers across the United States continue to struggle with rising health care costs and changing workforce demands. Over the past several years, premiums for company-sponsored health care have skyrocketed from an average of $6,498 per employee in 2005 to a projected $15,040 in 2018.

Employers and employees are also impacted by rising costs of health care. Twenty percent of health care consumers cite high costs as the major reason they have declined health coverage, stopped taking medications, or avoided necessary care. Worse yet, higher costs have not led to better outcomes: Chronic diseases are the leading driver of cost and increasingly the leading causes of death and disability.

Over the past decade, companies adopted creative new programs to manage costs for themselves and their employees, improve employee health, and optimize the use of high-quality, lower-cost providers. For example, Aon’s pharmacy coalition, which offers scale and purchasing power with pharmacy benefit managers (PBMs), helped companies save 10 percent to 15 percent in prescription drug costs annually. Aon’s private health exchange for active employees, which leverages competition to provide plan choice and lower costs, grew from 150,000 covered lives in 2013 to more than 1.3 million in just five years.

But companies cannot drive systemic change by themselves. The U.S. government remains the largest consumer of health care in the country and, as such, must change the way that health care is delivered and paid. If the federal payment system provides a safety net for inefficient providers, the motivation for change will remain weak. For true reform to occur, all stakeholders across the health ecosystem—employers, individuals, providers, insurers and government (Medicare, Medicaid, and TriCare)—must evolve. Otherwise, all payers will bear the burden of escalating costs.

Congress and the administration can take action by using tax reform to improve the employer-sponsored health care system. They can eliminate the excise tax on health benefits and preserve the current tax treatment of health benefits, eliminate the health insurance tax and expand the use of health spending accounts. The administration can follow through on its efforts to include quality and efficacy in its reimbursement formulas.

The American health care system is at a critical juncture. While fixing the system requires a concerted effort among employers, providers, insurers and patients, Congress and the administration can lead the way.

John Zern is executive vice president and global health leader for Aon.


The views expressed by this author are their own and are not the views of The Hill.