Major Companies Band Together to Control Health Care Costs

Twenty of the nation’s largest corporations have formed a coalition to create a more cost-efficient way of delivering health benefits to their employees. The Health Transformation Alliance (HTA), an initiative conceived by the American Health Policy Institute, wants to open the health care black box by increasing transparency of health care costs.

The Institute is headed by Tevi Troy, a former White House aide and Health and Human Services deputy secretary. Troy explains that the HTA will allow its members to become more informed purchasers of health care. “It will do so by combining the data from four million covered lives, making the HTA the largest private sector purchaser of health care, and using that data to make smarter decisions about their health care needs,” he said. “Furthermore, it will use the leverage provided by $14 billion in collective spending to be able to get better deals and more transparency from the health care marketplace.”

The alliance includes major corporations such as Verizon Communications Inc., Shell Oil Co., and American Express who will combine their collective purchasing data to change the way they contract for care. By sharing expertise and information about employee health outcomes, HTA members will use market power to negotiate for better deals and become more robust buyers of health insurance.

The price of health care continues to rise faster than inflation every year. More than half of the non-elderly population, 147 million Americans, currently receive health insurance through an employer. To ensure this majority is given quality care at a lower price, finding innovative ways to reduce costs must be a top priority.

Premiums and deductibles are rising across the board, making health insurance increasingly unaffordable for millions of workers and their dependents. According to the Kaiser Family Foundation, annual premiums for employer-sponsored family health coverage rose 4% in 2015 to $17,545. The average family premium has increased 61% from 2005 to 2015.

Marc Reed, chief administrative officer of Verizon, told the Wall Street Journal, “Health care is one of the things that employees need and want. What we’re trying to do is to make this sustainable so that kind of coverage can continue. . . . The fact is that when you start looking at this on a larger basis, now you’ve got four million lives, you can see where people are going for health care, you can see the outcomes.”

As the size and scope of the HTA expands, the alliance may form a health cooperative, where employers combine risk pools to purchase health services on behalf of their workers. “We’ve been extremely pleased by the reaction to the announcement of the HTA. We have been inundated with calls of support and people interested in trying to help. This is clearly an idea whose time has come,” Troy said.

The members of the HTA are:

American Express
American Water
BNSF Railway Co.
Brunswick Corp.
Caterpillar Inc.
Coca-Cola Co.
E.I. du Pont de Nemours & Co.
HCA Inc.
Hartford Financial Services Group Inc.
IBM Corp.
International Paper Co.
Lincoln Financial Group
Macy’s Inc.
Marriott International Inc.
NextEra Energy Inc.
Pitney Bowes Inc.
Shell Oil Co.
Verizon Communications Inc.
Weyerhaeuser Co.