That is why I have joined with Senator Russ Feingold, Democrat of Wisconsin, in introducing legislation that will help businesses both reduce heath-care costs and improve the quality of their employee health care. This crucial problem demands a bipartisan solution, and I am pleased to have Senator Feingold as a partner.
The Promoting Health Care Purchasing Cooperatives Act will help employers cope with rising costs by encouraging them to band together to form health care purchasing cooperatives to increase their bargaining power, helping them to negotiate both lower rates and better coverage.
This legislation would provide grants to groups of businesses so that they can form group-purchasing cooperatives to obtain enhanced benefits, reduced health care rates, and improved quality. By pooling their experience and interests, employer-members of a coalition can better resolve essential problems, such as rising health insurance rates and the lack of comparable health care quality data.
This legislation would create two separate grant programs to help businesses pool their resources. The first program would help large self-insured businesses – businesses that sponsor their own health plans – to form cooperatives. The second program would helps small and mid -sized businesses that purchase their insurance from an insurer.
We already know that this cooperative approach works. By using group purchasing to obtain rate discounts, more than 10,000 employers nationwide have been able to reduce the cost of health care premiums for their employees. According to the National Business Coalition on Health, which strongly supports this legislation, there are nearly 80 employer-led coalitions across the United States that collectively purchase health care. Through these pools, businesses are able to take a proactive approach to high costs. By sharing information on the quality of coverage, they can combat the inefficient delivery of health care.
Improving the quality of care will also lower the cost of care. By increasing the affordability of quality preventive services, we can reduce overall health care expenditures. An investment in the delivery of quality health care today will greatly lower the cost of long-term care tomorrow. The coalitions this legislation will support will provide a forum for employers to network and educate each other on strategies to contain costs and improve care. These coalitions will have a powerful voice in a dialogue with health care providers, insurers, and local HMOs.
This legislation is not prescriptive – it does not preempt state regulation of health insurance, nor does it dictate costs or coverage to health-care providers or insurers. Instead, it empowers employers to join together in the common cause of creating a healthier business climate, and a healthier workforce. The funding for these grants -- $60 million over 10 years drawn from existing administrative funds within the U.S. Department of Health and Human Services – will come from Washington, but the decisions will be made locally.
Problems with cost, quality, and access are felt most intensely in the local markets. It follows, then, that health care coalitions function best when they are formed and managed locally. As we have seen already, local employers -- both large and small businesses – that have formed health care coalitions have the both the knowledge of local conditions, and the concern for the economic health of their communities and the physical health of their employees to make the best decisions. This legislation will give more employers the opportunity to do the same.
###