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The Health Transformation Alliance

February 4, 2016 – A new alliance of big companies plan to share information about employee health spending and outcomes, with an eye to changing the game.

Executives from twenty major employers—companies like American Express, Coca-Cola, Caterpillar, IBM, Ingersoll-Rand, Shell Oil, and Verizon—have formed a partnership known as the Health Transformation Alliance. The group intends to use their collective data and market power to hold down the cost of providing workers with health care benefits.

Louise Radnofsky, writing in The Wall Street Journal, observed that the move “could ripple through the world of employer-provided health coverage, which has long been the way most Americans—about 170 million—get their health coverage.”  For while the current system is great for the insured, it leaves employers directly exposed to the rising costs of care and of prescription drugs.

Big employers typically self-fund their workers’ medical plans, through the plans themselves are administered by traditional insurance companies. This puts all the power in the hands of the health industry’s middle men, such as pharmacy-benefit managers and third-party administrators, even though despite the fact that it is the companies themselves meeting the cost of claims.

Bill Allen, chief human resources officer at Macy’s, said it was possible the companies would take a hard look at the healthcare supply chain. The alliance is expected to announce a pilot project for 2017 specifically aimed at curbing prescription medication costs. “Ultimately, some members say, they could even form a purchasing cooperative to negotiate for lower prices.”


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