Institute on Health Care Costs and Solutions
Rationale and Objectives
According to numerous surveys and reports from corporate executives, the most serious benefits problems facing employers today are:
- unrelenting rise in health care costs — up 50% in the past 5 years — with no apparent end in sight;
- high cost increases for prescription drugs, which especially affect retirees and employers’ FAS 106 liability;
- the recession, with related earnings decline and drop in consumer confidence, all greatly exacerbated by the impact of September 11;
- continued uneven quality of care and disturbing failures in ensuring patient safety;
- the cost of new treatments and technology, many of which are effective but layered onto ineffective treatment;
- a belief that "managed care has been tried" (and some say failed), so that "magic bullet" is no longer an option;
- the American people’s strong appetite for health care, especially new technology, without recognition of the costs of care, due to comprehensive coverage paid for mostly by employers or government programs;
- the middle aging of the workforce;
- overzealous laws and regulations that ignore the cost consequences of statutory changes, such as increased liability and benefit mandates.
Convinced that Corporate America cannot make and sell enough in this economy to keep absorbing these increases, the Board of the National Business Group on Health concluded that we must find new ways and new resolve to tackle these problems head-on with leverage from the combined purchasing power of large employers. To these ends, the Board of Directors of the National Business Group on Health at its recent Board meeting established an Institute on Health Care Costs and Solutions. There is no other organization dedicated to analyzing and examining these problems from the business perspective.
The Institute will be a force for sending a clear message that affordability and cost-effectiveness must be major considerations in the health system and the solutions we promote because the current business model is not sustainable. The Institute will focus on the large employer problems.
The benefits problems listed above are not just private employer problems. As costs rise, the number of small employers who are able and willing to provide coverage will decline. Furthermore, even when coverage is offered, more employees will decide that they are unable to pay their share of premiums, even if only 20% of the costs, so the number of uninsured will climb. As the economy has moved into recession, tax revenues have declined sharply. Public purchasers are facing a similar shortfall between the costs of health care benefits (both to their own employees/ retirees and public assistance programs) and the revenues available to cover their costs.
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