Craig Barrett: Time to Wake Up Health Care's Sleeping Giant

Stethescope and money
Stethescope and money

American employers face a dilemma.

They collectively provide health insurance for over 150 million Americans. As healthcare costs continue to spiral upward with no end in sight, where does the money come from? It comes out of profitability, or reduced global competitiveness, or out of employee pay checks.

No magic formula there but, as Herb Stein’s Law says, "If something cannot go on forever, it won’t.”

Employers cannot balance their commitment to employee health benefits, double-digit healthcare inflation, shifting costs to employees, and responsibilities to shareholders. Something has to change.

Perhaps some employers thought that the health reform bill - the Accountable Care Act (ACA) of 2010 - might solve their dilemma either by legislating immediate and effective cost control measures or by dismantling employer-sponsored health insurance altogether.

Sorry. Didn’t happen.

Though the long term consequences of the ACA remain to be seen, few employers expect it will contain their costs, and a good number believe it will accelerate spending inflation. Add to this the political chatter about whether reform is upheld, repealed, or starved to death, and the nightmare persists.

Your Money Your Vote - A CNBC Special Report
Your Money Your Vote - A CNBC Special Report

The prospect of eliminating employee health benefits may initially tempt employers. Starting in 2014, health insurance benefits will be mandated for large employers, who will have to pay a fine if they send their employees to shop for coverage in state insurance exchanges where lower income individuals will be eligible for tax credits. Though the fine is substantially less than the average cost of insuring an employee, there are a number of additional costs. These include Medicare, and Payroll taxes, as well as competitive disadvantages with respect to recruiting and retaining workers. Moreover, it is plausible that the fine will increase dramatically when the government is faced with the true costs of subsidizing healthcare for those buying insurance through exchanges.

What then are employers to do?

To continue providing quality health benefits while containing costs, employers need to be tenacious about achieving better value for their spending – just like every other business cost. Two main strategies for doing so include managing population risk to improve health and lower the demand for care, and demanding improvements in the efficiency of the delivery system supplying care. Engaging employees as informed and empowered stakeholders in their own health and care is central to the success of each.

"The prospect of eliminating employee health benefits may initially tempt employers." -Dossia Consortium, Colin Evans & Craig Barrett

Many employers are already turning to high-deductible health plans, a more rational insurance design that is intended to align each employee’s financial incentives toward maintaining better health and using healthcare more intelligently by promoting more value-conscious consumerism.

However, to optimize the impact of consumer-driven plans, employers need to equip employees with the data and tools needed to be proactive about their health and discerning about their use of healthcare services. They can do this by giving employees access and control over their personal health information, customized tools and services to help them achieve their health and wellness goals, and comparative price and quality data for healthcare providers and services. Everything you would expect from any normal consumer market.

Employers are uniquely positioned to make this happen. They pay the bills.

It works like this. Provide employees with Personal Health Records to put them in control of their health data aggregated from plans, labs, pharmacies, and providers. Employees become more informed and active participants in their care, and are able to share their health history with providers to receive better coordinated, higher quality, and more efficient care.

Use aggregated personal health information to power an entire ecosystem of health solutions customized to meet employees’ specific health needs – from blood pressure tracking to diabetes management, from pregnancy support to comparative pricing tools, and everything in between. Engage employees to make use of these data and tools through integration with incentive programs, plan design, and corporate culture. This helps employer and employees unite around shared goals: optimizing health while getting the highest value healthcare possible.

Employers become better positioned to drive supply side innovation by reclaiming control as payers from entities whose financial interests are not aligned and bringing market forces to drive efficiencies in the healthcare industry.

To paraphrase Sir Winston Churchill “You can always count on US employers to do the right thing – after they’ve tried everything else.”

Employers have been the sleeping giant of healthcare. They are now faced with few options but to actually wake up and get proactive about demanding more value from healthcare spending. When employers start using the giant-sized levers available to them, it will be good for employees, shareholders, and the healthcare system overall.

This post was written byColin Evans, President and CEO Dossia Consortium and Craig Barrett, Dossia’s Board of Directors and Former Chairman of the Board, Intel Corporation