Texas Employers’ Mission to End Anti-Competitive Healthcare Practices

The Texas Employers for Affordable Healthcare Coalition want to make in impact through legislative advocacy and uniting for negotiation power. When it comes to negotiating for lower healthcare…

The Texas Employers for Affordable Healthcare Coalition want to make in impact through legislative advocacy and uniting for negotiation power.

When it comes to negotiating for lower healthcare costs, no single employer has the leverage to significantly reduce the prices health systems charge for their services. If an employer wants to cut out a provider because of cost or quality, the system is unlikely to compromise by bringing down the price, as the patients that would come from that employer are most likely just a drop in the bucket of the system’s revenue. On the other hand, the employer is left to deal with the consequences of making its employees find new doctors should it change the network.

But with healthcare prices rising faster than inflation, wages, and the consumer price index, some employers are trying a new strategy: uniting to make an impact. In Texas, several business health coalitions are coming together to create Texas Employers for Affordable Healthcare Coalition, a nonprofit whose goal is to lobby legislators to create laws to make healthcare more competitive and create downward pressure on healthcare prices.

Texas employers pay about $14,000 per family in healthcare each year, and hospitals in Texas, on average, charge these employers more than triple the amount that Medicare would pay for the same service at the same facility. Employers feel that a good portion of that cost is due to the contracts health systems sign with health insurers. The organization is focusing on changing language in health insurance contracts that employers feel are uncompetitive.

Many rules that govern these contracts wouldn’t be found in any other agreement and are unique to healthcare’s closed system. For example, many contracts have a gag clause, where the health system and health plan are not allowed to share the price agreement with the employer who is paying the bills. Contracts also force employers to include all or none of the facilities in a health system. So if an employer wants to exclude a hospital in a system because of its high costs or low quality but keep others, it is unable to do so.

Another interesting aspect of these contracts is that insurance companies can’t provide information to the employer about which hospital has the best quality or lowest prices and cannot steer members toward those hospitals. TXEAHC wants to eliminate this anti-tiering and anti-steering language in contracts between insurers and providers. The coalition wants to work with Texas lawmakers to change this contract language during the 2023 legislative session.

TXEAHC is a joint effort between the Dallas-Fort Worth Business Group on Health, the Houston Business Coalition on Health, the San Antonio Business Group on Health, Texas 2036, and the Texas Business Group on Health. The coalition feels these increasing costs inhibit business growth, are a burden to families, and when nonprofits are the hospitals charging inflated prices, reducing resources available for other needs like schools and police officers.

In essence, the coalition believes that health systems are receiving too much for the services provided. Coalition executive director Chris Skisak says that the organization is providing every Texas legislator data on what hospitals need to break even compared to what they are receiving now. He says hospitals are making 40-50 percent margins on commercial insurance and 10-30 percent margins on Medicare in consolidated markets. “The argument that they don’t get reimbursed enough is false. It is just a false argument,” he says.

Skisak, who is also the executive director of the Houston Business Coalition on Health, says much of the costs come from unnecessary care, which providers are incentivized to give in a fee-for-service environment. He says that increasing administrative roles, luxurious accommodations, unnecessary advanced equipment, and overbuilding are other culprits. The coalition isn’t against making a profit, but true price transparency and competitive contract language are necessary for the market to be fixed. A consumer is unlikely to pay one price for a car on one side of town and eight times that price on the other side of town because of price transparency, but in healthcare, that sort of disparity is common.

In addition to legislative lobbying, TXEAHC hopes to unite employers to work collectively and negotiate for better healthcare prices. He says it will take employers working together to have enough leverage for health systems to take notice, but it has been challenging. “For these large competitors in the same industry, getting them to work in the same sandbox is not easy,” Skisak says. “They do it in areas they’re familiar with, but they’re not doing it in healthcare.”

Though the task is difficult, Skisak finds hope in a story from New York, where state legislation allowed a property service union representing 200,000 people to drop the Presbyterian system in New York from its network for being too expensive. The savings allowed the union to give members $3,000-$5,000 wage increases for the following year, Skisak says. “It’s an example of what can be done, but employers have to take the bull by the horns here.”

Published in D Magazine on Tuesday, November 8, 2022.

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