Health Care and Health Insurance Cost Disclosure

Congress is interested in finding ways to lower healthcare costs and increase access to coverage for all Americans according to HealthCareFinanceNews.com in an article released today. It would require that an employer disclose the amount of money it pays for an employee's health insurance coverage on the employee's annual Form W-2. The proposal also calls for employers to disclose the aggregate value of health insurance coverage under multiple plans, if employees are covered by more than one plan, such as major medical, dental plan and vision coverage.

If Americans could see clearly what healthcare costs, they would understand why wages have been stagnant in recent years according to the report. Once workers are informed, they might seek changes including improved efficiency, reduced waste and fewer unnecessary procedures, balanced with the natural need to have good coverage. As long as people are insulated from the cost and just think someone else is paying for it, then it's easy to overlook expenses. However, according to the article, once employees realize they themselves are paying for it, it should spark a genuine conversation about what to do.

According to MedicalNewsToday.com, some business groups have said they oppose the proposed bill because some larger businesses already report health coverage costs in an annual compensation sheet that compiles the costs of health care, retirement, transportation and any other benefits that accompany wages. Others cited cost as a major concern because benefit information typically is kept separate from payroll information, and creating a way to "interface" the two systems would introduce significant new costs, CongressDaily reports. In addition, some business groups are concerned that disclosing the cost information to the government could lead to additional taxation or determining the amount of total payroll employers spend on health coverage. However, the senators believe that showing employees the cost of health care they lose in wages will encourage them to be more thoughtful in making health care decisions and help reduce health care costs.

The US Department of Health and Human Services (HHS) reports that disclosure is needed. For the benefit of their employees, employers are encouraged to request that the health insurance plans, third party administrators, providers, and others with which they contract make available to enrollees in the health plans they sponsor the cost or price of their care. As consensus develops through broad-based national collaborations on approaches for measuring and reporting cost or price information for the benefit of consumers, employers are encouraged to adopt these approaches and to request that those with which they contract do the same. And, employers are encouraged to work to assure that cost or price information is made available with quality information. Employers also are encouraged to request that those with which they contract join broad-based, public-private collaborative efforts to develop strategies to measure the overall cost of services for common episodes of care and the treatment of common chronic diseases.

According to the National Association of Self-Employed (NASE), health insurance premiums grew about 4.7% for family coverage and cost about $12,680 in 2008, as reported by the Kaiser Family Foundation. Congress is hoping more transparency among employers and employees regarding health costs is on the horizon. They have introduced legislation would require employers to report what they pay for all polices provided to workers, including health insurance or separate dental and vision plans. Earlier this year, the Congressional Budget Office argued that if workers knew what they or their employers pay for health care, it might encourage them to reign in health care costs more actively. The proposal would require employers to include the amount paid for health insurance coverage on the W-2 Form. It would inform workers about the total cost of their coverage and what they may be giving up in wages.

More disclosure would be beneficial to employees and consumers. When information is available, more intelligent decisions can be made when purchasing insurance. Legislation to make full disclosure might backfire if legislators are unable to develop language suitable to manage administration of disclosure. Private market insurance must work for more consumer friendly ways to make price disclosure available.

Until next time. Let me know what you think.