Employment-based health insurance is failing. Costs are out of control. Employers have no effective strategy to deal with this. They must think strategically about fundamental change. This analysis explains how employers’ purchasing policies contribute to rising costs and block growth of economical care. Single-source managed care is ineffective, and effective managed care cannot be a single source. Employers should create exchanges through which they can offer employees wide, responsible, individual, multiple choices among health care delivery systems and create serious competition based on value for money. Recently introduced technology can assist this process.
Employment-based health insurance is failing. Costs are once again rising out of control. This will drive up the number of uninsured people. Employers still have no effective strategy to deal with this. Business leaders must understand how their past purchasing policies have contributed to the problem and must think strategically about fundamental changes.
This analysis reviews the causes of the recent acceleration in health care spending. I review employers’ purchasing policies and explain how they have contributed to rising costs and blocked the growth of economical care. Finally, I describe how and why employers should instead create exchanges through which employees could make responsible choices among carriers and delivery systems.