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Why Employers Drag Feet on Value-Based Insurance (04:04)

Lynn Garbee, Senior Director of Reimbursement and Collaborative Care at Cigna HealthCare, would like to see employers jump into the value-based insurance reimbursement world with two feet and collaborate with payers in creating a healthy workforce. So why are employers hesitating? What do employers value and want to invest in when it comes to value-based insurance and health care payment plans in general?

“We’re at a point now where there’s a give and take,” says David Lansky, President and CEO of the Pacific Business Group on Health. “I would like to think of it as a co-evolution that we have to undertake, where the constraints and the requirements of employers are shared with payers.” Employers want payers to back up their claims for which networks and services work by sharing credible, evidence-based innovation in both cost savings, quality improvement, and outcomes. In other words: transparency. Many employers are skeptical when plans say, “We’ve got this new program, this new network, this new centers of excellence program” without offering evidence to share with employees that these new arrangements are better, safer, higher-quality care.

What about limited and narrow networks? Harvard health care economist Leemore Dafny points to research on state health insurance marketplaces showing that narrow networks are associated with much lower premiums, and that consumers are electing to purchase these plans. “Yet employers are really dragging their feet,” she says.

Employers sponsored benefits before the Affordable Care Act because they wanted to get the right employees, and with the labor market tightening, they’re much less interested in creating benefit designs that cause friction, replies Bob Galvin, Equity Healthcare’s CEO. Additionally, employees don’t understand narrow networks in that they don’t understand why employers think one doctor is better than another.

“The other thing is that we’ve been a victim, in a sense, of our own success,” says Galvin, “which is that health care costs have been very flat over the past few years.” Costs have only gone up 1 or 2% for employers, which means that C-suite decision makers would rather focus their company’s money on other things. “If the labor market were wide open and health care costs were going up at 10%, you would get much more updated.”

“I’m disappointed to hear that executives are not concerned, because guess how they’re making those premiums not go up so much? They’re turfing it over to us [the employee/consumer],” says Dafny.

Galvin agrees, noting that it’s just part of the nature of where health care fits into the company. “It’s one of the flaws of employer-sponsored insurance. It is very difficult to get executives who are manufacturing airline parts or whatever to really understand this. They look at the costs. They want to make sure they can get labor. And if that’s okay, they want to run their companies.”

From the NEJM Catalyst event Navigating Payment Reform for Providers, Payers, and Pharma, held at Harvard Business School, November 2, 2017.

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