POLICY: Getting transparency in benefit costs, by Eric Novack

After his first post on how to get doctors to provide care to uninsured patients, surgeon, talkshow host and THCB podcast star Eric Novack is back with a second installment. And believe it or not I completely agree with him. Here’s Eric:
I want to introduce another component of an incremental approach to health care transformation.  Many of you will wonder why it even qualifies as a reform- it does not require legislation, does not redistribute, reclassify, or create.  But let’s summarize the last post and the very insightful and valuable comments:
  1. People who can demonstrate financial hardship can go to the doctor for care- at no charge to them. Doctors would get a tax credit for a predetermined value (e.g.. Medicare rate) of the services. Those who deliver care are given incentives to provide care to those who would otherwise feel inhibited to seek care. (see prev. post for more)

The next component:  Require that employee tax statements (W-2) include the amount that employers spend on health benefits.
Employers understand that employee compensation includes benefits.  As health care costs have soared, costs to employers have soared as well. For example, someone earning $30,000 a year in salary sees that number on the W-2. Employers, on their tax returns, list employee health benefits as a line item, because that amount is tax deductible (a topic worth several radio programs and many blogs in its own right…)
The employee is ‘blind’ to this exact cost. If the cost for an employee was listed, employers could demonstrate how much money the employee actually receives directly and indirectly. In the example, let’s make health benefits cost $5000. Now, the W-2 would have $35,000 as the total compensation, but $5000 would appear as a line item for ‘health benefits’, which would be subtracted for tax purposes.
One of the many fears about HSAs and CDHP is that costs will just be shifted — or, put another way — companies will add to their profits at the direct expense of employees. Since we know that HSA prices actually decreased (eHealthinsurance.com data), if companies are forced to be transparent to employees about healthcare costs, it will be much more difficult to ‘reduce compensation’, as opposed to using the savings to fund the HSA savings accounts.
A win for transparency, corporate oversight, and the promotion of CDHC.

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2 replies »

  1. So, what would it take to accomplish this? Who are the stakeholders involved and who needs to apply pressure where and how?