October 07,2008

Grassley, Baucus, Wyden, Enzi, Nelson Unveil Health Costs Disclosure Discussion Draft, Seek Public Comment

WASHINGTON – Sens. Chuck Grassley, Max Baucus, Ron Wyden, Mike Enzi, and Ben Nelson today released a discussion draft of legislation that would provide for greater disclosure of health insurance costs to workers. Better informing workers about what they pay for health care and how much costs are increasing year after year is a way to begin to help to control health care costsand has been suggested by experts including the director of the Congressional Budget Office. The senators are seeking public comment on their proposal.

Grassley is ranking member and Baucus is chairman of the Committee on Finance. In testimony before a Finance Committee hearing in June, Peter Orszag, director of the Congressional Budget Office, said, “Workers may demand less efficiency from the health system than they would if they knew the full cost that they pay via foregone wages for coverage or if they knew the actual cost of the services being provided. Making the underlying costs associated with employment-basedinsurance more transparent might prove to be quite important in containing health care costs.”

Grassley said, “The point of the proposal is to inform people about their health care costs.Once informed, they might seek changes including improved efficiency, reduced waste and fewer unnecessary procedures, balanced with the natural need to have good coverage. Some employees might want to receive different compensation in the form of a higher salary, additional vacation, ormore child care instead of more health coverage than they need. As long as people are insulatedfrom the cost and just think someone else is paying for it, then it’s easy to overlook expenses. Butonce they realize they themselves are paying for it, it should spark a genuine conversation aboutwhat to do. Without any knowledge of how much they are paying, though, people aren’t equippedto join the debate, and their view, generally, is, don’t touch my health care. And so nothing can getdone politically and costs continue to spiral.”

Baucus said, “Today, Americans don't have enough health care information. We often don'tknow how much our health care costs, or why there has been the rapid spike in prices in recentyears. Making people aware of how much is spent for their health insurance coverage is animportant step in helping us all become more informed about health care costs. When people get asense of the cost of their insurance, they may look for ways to reduce the waste and inefficiency thatare driving up costs in our health care system. This idea goes hand in hand with other steps to lowerhealth care costs, like comparing the effectiveness of medical treatments and getting that informationto the public, too. Finding ways to lower health care costs, along with measures to increase accessand cover more Americans, will be an important part of the health care reform agenda I intend topursue in the Finance Committee next year.”

Wyden said, “Educating Americans about their health care costs is an important first stepin reforming the system. If everybody could clearly see what their employers were paying for theirhealth insurance coverage, they’d understand why their wages have been so stagnant in recent years.This could lead workers to demand that their employers offer more efficient health coverage options.I hope the public reads this proposal and gives us their reaction so we can craft a bill that will bring health care costs out of the shadows and provide consumers with information to make betterdecisions about their health care.”

Enzi said, “Most American workers do not realize how much their employers pay for their insurance plans – nor do they realize how these costs reduce their wages and other benefits. Byputting this valuable information into the hands of workers, we can help them become smart healthcare consumers with the knowledge they need to make the best decisions for themselves and theirfamilies. Including the cost of employer contributions to health insurance is an important step toward helping families find the health care plans they need at prices they can afford.”

Nelson said, “With health care costs soaring at twice the rate of inflation, Americans must have a clearer picture of how much they and their employers are spending on health care. We need to empower Americans to be better health care consumers and make economic decisions that are in their best interest. This has to happen on the coverage end and on the service end, no matter whose pocket it is coming out of. This has the potential of lowering health care costs across the board.”

 The discussion draft legislation would require that an employer disclose the amount of money it pays for an employee’s health insurance coverage on the employee’s annual Form W-2.Many employees are unaware of the amount of money their employer pays for their health insurance coverage. Experts argue that this lack of transparency results in inefficient choices of health coverage, leading to increased health care spending. Disclosing the amount an employer pays for health insurance coverage on behalf of its employees on the Form W-2 would inform workers about the total cost of their coverage and what they may be giving up in wages. Making the cost of health insurance coverage more transparent – in conjunction with other health care reforms such as health information technology, prevention, and pay for performance – could eventually help to control health care costs, the senators said.

Public comments should be sent electronically to disclosure@finance-rep.senate.gov by December 31, 2008. Questions may be directed to Chris Condeluci (Grassley) or Shawn Bishop(Baucus) by calling 202/224-4515. A description of the discussion draft legislation follows here.

The legislative language of the discussion draft is attached as a related file to this release.