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 BenNelson today released a discussion draft of legislation that would provide for greater disclosureof health insurance costs to workers.

Better informing workers about what they pay for healthcare and how much costs are increasing year after year is a way to begin to help to control healthcare costs and has been suggested by experts including the director of the Congressional BudgetOffice. The senators are seeking public comment on their proposal.

Grassley is ranking member and Baucus is chairman of the Committee on Finance. Intestimony before a Finance Committee hearing in June, Peter Orszag, director of theCongressional Budget Office, said,

“Workers may demand less efficiency from the health systemthan they would if they knew the full cost that they pay via foregone wages for coverage or ifthey knew the actual cost of the services being provided. Making the underlying costs associatedwith employment-based insurance more transparent might prove to be quite important incontaining 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 andfewer unnecessary procedures, balanced with the natural need to have good coverage. Someemployees might want to receive different compensation in the form of a higher salary,additional vacation, or more child care instead of more health coverage than they need. As longas people are insulated from the cost and just think someone else is paying for it, then it’s easy tooverlook expenses. But once they realize they themselves are paying for it, it should spark agenuine conversation about what to do. Without any knowledge of how much they are paying,though, people aren’t equipped to join the debate, and their view, generally, is, don’t touch myhealth care. And so nothing can get done politically and costs continue to spiral.”

Baucus said, “Today, Americans don't have enough health care information. We oftendon't know how much our health care costs, or why there has been the rapid spike in prices inrecent years. Making people aware of how much is spent for their health insurance coverage isan important step in helping us all become more informed about health care costs. When peopleget a sense of the cost of their insurance, they may look for ways to reduce the waste andinefficiency that are driving up costs in our health care system. This idea goes hand in hand withother steps to lower health care costs, like comparing the effectiveness of medical treatments andgetting that information to the public, too. Finding ways to lower health care costs, along withmeasures to increase access and cover more Americans, will be an important part of the healthcare reform agenda I intend to pursue 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 fortheir health insurance coverage, they’d understand why their wages have been so stagnant inrecent years. This could lead workers to demand that their employers offer more efficient healthcoverage options. I hope the public reads this proposal and gives us their reaction so we cancraft a bill that will bring health care costs out of the shadows and provide consumers withinformation to make better decisions about their health care.”

Enzi said, “Most American workers do not realize how much their employers pay fortheir insurance plans – nor do they realize how these costs reduce their wages and other benefits.By putting this valuable information into the hands of workers, we can help them become smarthealth care consumers with the knowledge they need to make the best decisions for themselvesand their families. Including the cost of employer contributions to health insurance is animportant step toward helping families find the health care plans they need at prices they canafford.” Nelson said, “With health care costs soaring at twice the rate of inflation, Americansmust 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 serviceend, no matter whose pocket it is coming out of. This has the potential of lowering health carecosts across the board.”

The discussion draft legislation would require that an employer disclose the amount ofmoney 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 healthinsurance coverage. Experts argue that this lack of transparency results in in efficient choices ofhealth 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 informworkers about the total cost of their coverage and what they may be giving up in wages.

Makingthe cost of health insurance coverage more transparent – in conjunction with other health carereforms 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.