While Democrats and Republicans tussle over whether to repeal the federal healthcare reform law, employers and individual consumers have to make choices about how to cope with the ever-increasing cost of health insurance and medical care. The Bay Area Council, an influential trade group for more than 275 large employers in Northern California, offered some guidance on that front this week, urging businesses to promote a more affordable, higher-quality healthcare system. The new federal law will help on that front, the council argues in its “Roadmap to a High-Value Health System,” but there is much for employers, insurers and healthcare providers to do as well.

The council is trying to provide leadership on the issue in part because its members, which include the likes of Google, Chevron and Bank of America, foot the bill for so many Californians’ health insurance. Those companies have seen healthcare costs rise faster over the last decade than many of their other expenses. That’s a problem not faced by their competitors overseas, where workers’ health insurance costs are typically covered by all taxpayers, not just by employers.

The answer to the problem isn’t as simple as requiring doctors and hospitals to post their prices so that consumers can shop more effectively for healthcare. According to the report, “the vast majority of healthcare costs are accrued in emergency, end-of-life or chronic disease management situations” that make comparison shopping impossible or counterproductive.

Instead, the council wants to make it easier for people to choose among competing healthcare plans that do a far better job of aligning consumers’ interests with those of their healthcare providers. It calls on insurers and self-insured businesses to give doctors and hospitals a financial incentive to keep their patients healthy, rather than rewarding them for treating patients who are sick. Consumers, meanwhile, should be prodded to do more to avoid chronic disease, possibly by offering them lower premiums or cash incentives for meeting fitness objectives. And state policymakers — especially those setting up a new insurance exchange for individual and small-group policies, as called for by the federal healthcare law — need to support the new models emerging in the private sector.


California had been a pioneer in managed and coordinated healthcare, which helped keep its costs low in comparison to other states. But the council’s report says that the state has been drifting away from those approaches, which has contributed to healthcare spending more than doubling from 2000 to 2011. Rather than sitting back and waiting for the federal law to be fully implemented or repealed, the council urges California employers to use their healthcare dollars to start fixing the system. It’s a message from the Bay Area that should be heeded throughout the state.