E&W Blog

Today, the Subcommittee on Health, Employment, Labor, and Pensions held a hearing to examine how direct contracting between employers and health providers is lowering health care costs for both employees and job creators.

Subcommittee Chairman Rick Allen (R-GA) started the hearing by explaining how direct contracting is an innovative model that allows employers to deliver high-quality care at lower costs.

“Direct contracting allows employers to negotiate directly with providers, helping reduce costs, improve quality, and ensure more health care dollars are spent on patient care rather than administrative overhead. Direct contracts may also include direct primary care, which allows patients to access primary care services for a flat membership fee. This model decreases the total cost of claims, and patients are getting more comprehensive care and experiencing better health outcomes,” he said.

Witnesses discussed how rising health insurance costs are putting pressure on workers, families, and employers.

“[E]mployers manage complex networks, prior authorizations, claims processing, compliance, drug-formularies and ERISA fiduciary responsibilities. These responsibilities are the reason for proliferating administrative middlemen in the employer-sponsored heath care chain. Employers do not benevolently absorb health care costs; these expenses are simply a growing share of total employee compensation, crowding out wages…Employees ultimately bear these costs, either through suppressed wages as employers adjust their total compensation budgets, or through lost job opportunities as American companies struggle to compete,” said Dr. Chad Savage, Founder and Physician at YourChoice Direct Care.

Mr. Mark Newman, CEO and Co-Founder of Nomi Health, explained to Committee Chairman Tim Walberg (R-MI) how cutting out middlemen and allowing employers to participate in direct contracting can lower costs, improve outcomes, and deliver better value for workers and their families. 

“Employers know how to buy things, and we should make it as simple and easy as visa and Mastercard…not at a 15 or 20 percent margin that any insurance claims that they need,” said Dr. Savage. 

Democrats continued to use their time to criticize the Working Families Tax Cuts and used fabricated data to back their claims.

Rep. Bob Onder (R-MO) highlighted his bill, Health DATA Act, which helps ensure employers can access the information they need to oversee their health plans and pursue lower-cost, higher-quality care. 

“If Congress passes your bill…employers will be able to match the money that they pay to the bills that we receive and make sure that the right amount is sent. We’ll be able to identify the best providers and systems, and improve our networks,” explained Mr. James Gelfand, President and CEO at The ERISA Industry Committee (ERIC).

Bottom line: When employers have the flexibility to pursue arrangements like direct contracting, workers and their families benefit from more affordable coverage, better access to care, and stronger health outcomes.