Employer coalitions have strong impact
Groups of public and private employers are forming coalitions that are having a strong impact, resulting in decreased premiums, increased consumer choices, and enrollment in broad-panel HMOs.
According to the SMG Market Letter, there are 138 local employer coalitions that represent more than 78,200 employer locations. The employers represent more than 22 million employees and have begun to impact the market, specifically in Minneapolis and San Francisco. The Pacific Business Group in Health, a voice for more than 33 employers and 2.5 million lives in San Francisco, showed their impact by decreasing HMO premium rates for their market.
Employer coalitions are also controlling costs by forming common drug formularies and using pharmacy benefit management companies (PBMs). Almost 47% of coalitions use a PBM, and nearly 30% of groups involved in health care purchasing use a common formulary. Finally, 40% of the coalitions are contracting directly with providers and cutting out the HMO intermediary.
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