Katie Martin, M.P.A., has 3 messages for employers paying healthcare costs

Employers frustrated by rising health care costs will find their experience confirmed in the Health Care Cost Institute’s (HCCI) latest Health Care Cost and Utilization Report, released today, which covers 2019 through 2023.

Katie Martin, M.P.A., president and CEO of HCCI, said the report carries three messages for employers. The first is that the pain they feel in finance and human resources meetings is real and validated by the data. “It is getting more expensive. The burden that you’re feeling is reflected in the numbers,” Martin said.

The second is that employers, through their third-party administrators (TPAs), are uniquely situated to negotiate prices down. If prices are the problem, Martin said, the healthcare system needs participants in healthcare purchasing to help bring them down. She acknowledged that negotiating health care prices is not what most employers went into business to do.

The third is that pushing down costs requires looking at where the dollars go. Hospitals account for 46% of spending, Martin said. She stressed that hospitals are central to people’s health and that she wants them to remain robust, but “if we’re going to make a dent, we have to figure out where we can make changes in hospitals.”

In an interview with Managed Healthcare Executive, Martin also reflects on what is new in this year’s report. Compared with the years affected by COVID-19, which brought spikes in telehealth and unusual trends, the consistency of the findings is itself the news, she said. Martin said policy conversations earlier this year that questioned whether the United States has a cost problem and who is responsible for it reinforced the need to repeat the message every year: Look at hospitals, look at the trajectory of prescription drug spending, and look at prices.

HCCI’s data set includes 30 million covered lives of people under age 65 who get insurance through work. HCCI issued a report today that found that health care spending per person grew by 18.8% from 2019 to 2023, which translates to $1,068 of additional spending per person. Prices drove that spending increase, climbing by 17.7% during those years, while utilization grew by just 1.8%.