As lawmakers search for ways to curb spending and address the soaring deficit, the U.S. Chamber of Commerce and the Coalition for Affordable Health Coverage (CAHC) hosted a day-long conference, titled “Controlling Costs: The Price of Good Health,” to discuss the causes and dangers of runaway cost growth and cutting-edge strategies from employers, providers, and government officials to address this challenge. As purchasers of care, employers can do much to shape the health policy debate and exert positive leverage for change.
“If we don’t get health care costs under control, our economic recovery will be further stalled,” said Bruce Josten, executive vice president for Government Affairs for the U.S. Chamber. “The escalating cost of health care is a primary contributor to our debt and deficit problem. Unless we find a way to curtail rising health care costs, we face an ever widening sea of red ink in which the economy will drown. If we do not reform our health care entitlements, there is little hope that we can restore our nation’s finances.”
Despite what was promised when the reform law was enacted, health care costs are actually continuing to rise. Though many major provisions of the health care law have yet to be implemented, costs will continue to climb as other parts of the law, such as the employer mandate, take effect. The CBO now estimates the law will increase federal health care spending by nearly half a trillion dollars over the next decade, and administration officials have acknowledged that the savings earmarked for Medicare will never materialize. Private employer health care costs are also on the rise due in part to mandates already in effect.
The Chamber has long advocated in favor of market-based solutions which will help lower costs. These private sector solutions will strengthen competition, enabling consumers to choose the coverage they want. Medical liability reform and efforts to stanch defensive medicine would also drive down costs. And widespread adoption of health information technology—including electronic prescriptions and medical records—could further improve quality, lower costs, and reduce medical errors.
Repealing the health care law outright would be the single most important thing we could do to help constrain costs. In lieu of that, one of the Chamber’s key priorities is to repeal the employer mandate, which would reduce uncertainty and eliminate the perverse incentives for companies to reduce the number of full time workers and restrict their growth.
“Absent cost reduction strategies, if employees respond to the new federal mandate to purchase insurance by enrolling in their employer health plans, many workers will be too expensive to hire or retain,” said Joel White, executive director of CAHC. “If employers respond by terminating or significantly curtailing those plans, then federal spending projections could be low by a trillion dollars.”
A CAHC sponsored study of the labor market impacts of rising health costs by Sylvester Schieber of Towers Watson was unveiled at today’s event. It revealed that, despite passage of major “reforms,” out-of-control medical spending is adversely affecting everything from national competitiveness and employment levels to living standards and wage growth. The study uses federal income and health survey data to measure the role of medical inflation in wage growth and employment. Among the findings: rapidly growing health costs foster wage inequality and create structural barriers to hiring or retaining the low skilled.
Business executives and political leaders addressed the conference including House Majority Leader Eric Cantor, White House Deputy Chief of Staff Nancy-Ann DeParle, and CBO Director Douglas Elmendorf
The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.