Human Resources
Thought Leadership

Health Care Reform: Creating a Sustainable Health Care Marketplace

Health Care Reform: Creating a Sustainable Health Care MarketplaceAs health care reform proposals work their way through Congress, companies and individuals are increasingly concerned about the price tag — to the federal budget, but also to their own bottom lines and wallets. Cost estimates for the different bills have primarily focused on the federal budgetary impact of reform.

Business Roundtable, an association of chief executive officers of leading U.S. companies, commissioned Hewitt to prepare a report to evaluate health care reform through the lens of the private sector and to project the likely effect of proposed legislative changes on employer health care costs. The report, Health Care Reform: Creating a Sustainable Health Care Marketplace, concludes that if the cost trends of the past 10 years repeat, by 2019, employment-based spending on health care at large employers will be an average of $28,530 per employee when employer subsidies, employee contributions, and employee out-of-pocket costs are combined. We estimate that if enacted properly, the right legislative reforms could potentially reduce that trend line by more than $3,000 per employee, to $25,435. If we are able to enact broader market reforms that eventually lower future cost increases to an average of 4% per year, we could potentially reduce average per-employee costs further to $23,151 per employee by 2019.

Our report addresses four key questions:

  • Of the reform initiatives currently being considered that intend to curb the rate of health care cost growth, which ones are likely to have a significant impact on the health care economy at large?
  • What missing ingredients should be added to current proposals to enhance their potential to reduce future cost trends?
  • What are the risks that could undermine the realization of these cost savings?
  • What can be done longer-term to restructure the current health care delivery system in order to reduce annual health care cost trend to a sustainable rate, such as the overall rate of GDP growth (approximately 4% per year)?

This is the second report Hewitt has developed for Business Roundtable. In September 2009, Hewitt wrote Health Care Reform: The Perils of Inaction and the Promise of Effective Action, which explores the cost of inaction around health care reform and identifies ways to build an improved, and more efficient delivery system.

Creating a Sustainable Health Care Marketplace. (PDF format)

Read more about Hewitt's efforts to participate in the health care reform debate.