How Employers Can Control Health Costs by Joining Forces


As purchasers of one-third of all health care provided for U.S. workers and their families, employers have had some success in controlling rising health care costs. They’ve done so mainly by shifting costs to employees through high-deductible health care plans.

But as the Commonwealth Fund’s David Blumenthal, M.D., Lovisa Gustafsson, and Shawn Bishop note in Harvard Business Review, the evidence shows this strategy may have reached its limit. Nearly one-quarter of workers are underinsured, meaning their coverage doesn’t provide adequate protection from the costs of care. And some may be skipping needed medical services, jeopardizing their health and productivity.

Employers can better face the challenge of high costs, the authors say, by joining together to form purchasing alliances. Doing so will boost their purchasing power — allowing them to negotiate better deals on prices from providers.

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