How Benefits Leaders can Advocate for Change in Health Policy

“We have come to a time of crisis in America’s medical care.”

“Unless action is taken in the next 2 to 3 years, we will have a breakdown in our system which could have consequences affecting millions of people throughout this country.”

These quotes might sound like they come from recent news, but the reality is Richard Nixon made these statements in 1969 and 1971, when health spending was around 7% of GDP. Today, we’re at 18%.

Healthcare costs have been unsustainable for decades, and benefits leaders continue to stare down trend increases year after year. During Lantern’s recent Specialty Care Summits, Shelly Towns, Chief Marketing Officer, led discussions with benefits leaders and policy experts who all agreed public health policy must be a strategic lever to ensure change.

“Nobody wants to talk about policy… until it becomes one of the liveliest topics in the room with benefits leaders,” Towns said, recalling the conversations.

Policy directly impacts your bottom line, your employees’ health outcomes and your ability to provide meaningful benefits. From pharmacy benefit manager (PBM) reform to hospital pricing and direct contracting, policy decisions are reshaping what’s possible for employers willing to engage.

What Employers Need to Know about Federal PBM Reform

One policy area stood out as the hot topic during our conversations. The House of Representatives passed PBM Reform in January as part of the Consolidated Appropriations Act. The legislation reshapes how PBMs operate and manage prescription drug benefits with a goal of increasing price transparency.

“You’ve got to be excited about PBM reform,” said Cora Opsahl, Health Fund Director at 32BJ Health Fund. “It probably doesn’t actually do much. But we have to be excited that anything happened.”

Panelists emphasized that PBM reform represents:

• Recognition of long-standing employer concerns about lack of transparency
• Momentum after years of stalled efforts
• A foundation employers can build on

“There’s been a lot of employer organizations… fighting for this for years,” Opsahl added, underscoring why even incremental reform matters.

The reform doesn’t take effect until 2028, however, and Opsahl estimated that its impact on employers might not materialize until 2032.

There are some genuinely exciting components, the panel discussed. PBMs must report individual National Provider Identifiers (NPI) for specialty drugs to plan sponsors, which Chris Whaley, Associate Professor, Health Economist at Brown University School of Public Health, highlighted as “quite important” for measuring healthcare spending. The offshore Group Purchasing Organizations (GPO) ban, set for 2029, could significantly impact PBM profit margins by eliminating opaque rebate practices and ensuring PBMs can’t use foreign subsidiaries to avoid regulation in the U.S.

Perhaps most importantly, the Department of Labor released a proposed rule for fee disclosure requiring PBMs to explain their authority to change formularies, explicitly state when they’re acting as plan fiduciaries, and list relevant conflicts of interest.

“The only way that you can fight them is if you have the information,” said Ed Dowell, ATDA President and CRLO Chairman at National Railway Labor Conference.

State-Level Healthcare Innovation & Reference-Based Pricing

While federal progress remains incremental, states are taking bold action. Whaley noted that about 40 states are facing severe financial deficits, with roughly half working through their state employee health plans to implement innovative solutions.

Montana pioneered reference-based pricing in 2017, Whaley said, capping hospital prices at 230% of Medicare. The result? They didn’t have a premium or deductible increase in five years. Oregon saved $100 million with similar policies. CalPERS, the largest public pension fund, is projected to save a billion dollars. These aren’t theoretical savings, but real dollars returning to employers and employees, Whaley said.

States are also tackling corporate consolidation. Several have implemented policies requiring oversight when hospitals acquire physician practices. Opsahl says New York has been working on site-neutral legislation that would cap approximately 70 procedures at specific rates regardless of where they’re performed.

Indiana’s story is particularly instructive, Whaley added. Through employer coalitions like the Employers’ Forum of Indiana, benefits leaders successfully pushed for policies addressing the state’s highest-in-the-nation hospital prices. The legislation now benefits all commercial lives in Indiana—not just state employees.

What makes this even more remarkable? “California, Texas, Indiana, Vermont and Oregon all agree on nothing besides that hospital markets need to be fixed,” Whaley said.

Policy as a Doorway to Direct Contracting

Policy alone doesn’t solve healthcare challenges, but it can create leverage. Several panelists described how policy changes around transparency and contracting enabled employers to pursue direct relationships with health systems.

“The pathway to getting us a seat at the table was direct contracting,” said Claire Brockbank, Director of Policy and Strategy at 32BJ Health Fund. She shared a striking example of what that leverage made possible: “We went from paying over 400% of Medicare on average to about 200% of Medicare,” she said.

Those savings flowed back to members, reinforcing that employer‑led action can drive meaningful change.

Your Voice Matters: Why Employers Must Engage in Policy Discussions

The most important way to push forward with change is to reach out to policymakers. “Legislators have told me, ‘We’re hearing from the PBMs, we’re hearing from the insurance companies, we’re hearing from the hospital associations, we never hear from employers,’” Opsahl said. “The policy makers don’t need you to take a position. They need to know what you think.”

Jim Winkler, Chief Strategy Officer at Business Group on Health, asked Summit attendees in the room an important question: “How many of you think the healthcare system is really working in the best interest of your employees today?” No one in the room raised their hand, and he added, “So why on Earth are we afraid of disrupting that system? Disruption is what we should lean into because the current system isn’t working.”

Panelists recommended sharing your real experiences with policymakers, such as double-digit trend, hospital costs consuming 60% of spend, lack of transparency in rebates and GLP-1 costs impacting budgets.

“I think Congress people and their staff looking at health policy are very interested to hear the employer voice,” said Scott Kirschner, Senior Director of Global Benefits at Greystar. “Get to know your representatives.”

Michael Costello, HR | Benefits-Commercial Strategy Senior Director at NextEra Energy agreed, and said while it can be a little bit intimidating, it’s important to share how policy directly affects their constituents, your employees. “It’s all about the votes at the end of the day,” he said.

For companies uncomfortable with direct advocacy, trade associations and employer coalitions provide effective alternatives. “You can access the offices on the hill or with the regulators through those trade groups, and then you still show up as you, and they know it’s you, but your company’s name is not out there,” said John Puccio, Total Rewards COE, Benefits Strategy at Ferguson.

Public health policy needs to be part of every benefits strategy to achieve change. While change can be slow and often imperfect, employers and unions who engage thoughtfully and collectively can shape outcomes that once seemed out of reach.