7.13.23
Executive Summary
The prices charged by hospitals and other health care providers are major drivers of growth in health care spending. Most employers believe health care spending negatively impacts their competitiveness and limits their ability to increase employees’ compensation. Employers can try to address high provider prices by changing the design of employee benefits. But after decades of rising premium contributions and cost sharing, employees may see any such changes as shifting even more spending onto them. Employers can also advocate for state and federal regulation to address prices, but they may wonder whether their employees want them to play that role.
Public Agenda, with support from Arnold Ventures, set out to learn how employees understand health care costs and how they see employers’ roles in addressing providers’ pricing through benefit design and policy advocacy. In January and February 2023, Public Agenda conducted five focus groups with beneficiaries of employer-based insurance and conducted in-depth interviews with selected focus group participants.
Key Findings in Brief
- Focus group participants were enthusiastic about government action to control providers’ prices but raised concerns about changes to benefit design. They wanted employers to advocate for government action but doubted they would or could do so.
- Government regulation of providers’ prices and the limiting of hospital mergers both attracted strong support in these focus groups.
- Participants saw price regulation as a way to make pricing more reasonable and predictable. They saw limiting mergers as a way both to control prices and protect quality by checking hospitals’ power.
- In principle, participants supported employers’ advocating for government action to control providers’ prices. But they questioned whether small employers have enough power and whether large employers have enough incentive to do so.
- Of the three benefit designs participants considered, they favored reference pricing over adopting tiered networks or eliminating coverage for low-value providers, both of which, they believed, would adversely affect access. They did not trust insurers to measure quality.
- Participants favored reference pricing, which they saw as a way to make pricing predictable with minimal impact on access. But they worried it could leave providers with less cash flow and fewer incentives to provide high-quality care.
- Tiered networks sparked concern. Participants saw tiering as having the potential to maintain access, but they worried that it would make care more expensive for people who cannot travel to preferred providers.
- Eliminating in-network coverage for low-value providers was not popular. Participants saw it as limiting access, especially for low-income people, people of color, and rural communities.
- Participants did not trust insurers to decide which providers should be categorized as low- or high-quality in tiered or narrow networks.
- Participants underestimated how much providers’ prices drive growth in health care spending and how much employers contribute to premiums. When presented with data, they reasoned that providers’ steep price increases must be driven by greed.
- Initially, focus group participants blamed inflation, insurers, and pharmaceutical companies for high health care costs more than they blamed providers.
- When presented with data, participants were surprised to learn insurers and pharmaceutical companies account for relatively low proportions of health care spending. They were also surprised that providers account for a relatively large share of spending and that providers’ prices have increased so steeply. But these trends fit with their view of the health care system as greedy in general.
- Participants initially believed employees pay the bulk of their own insurance premiums, but they understood that both employers and employees are affected by costly premiums.
This research is supported by Arnold Ventures.
