Breaking the Cycle: How Employers Can Stop Health Insurance Cost Increases | Employee Benefits

November 15, 2024

Certified Healthcare Fiduciary Coach and Health Value Advisor

Recently, an HR Director from a prospective client asked me a question that strikes at the heart of one of the biggest challenges facing employers and employees alike: “When is this going to end?” She was referring, of course, to the relentless, year-over-year increases in health insurance premiums. My answer?

“If you mean health insurance increases, the answer is never. Your premiums feed the Wall Street profits of insurers and private equity groups. They can’t let it end—only the consumer can make the bleeding stop. The only question is: Will they?”

This exchange reflects a painful truth that many employers and HR professionals know all too well. Health insurance costs have spiraled out of control, driven by a system that prioritizes shareholder returns over patient care. Insurers, backed by private equity interests, are incentivized to maintain these profit margins, ensuring that premiums continue to rise. The idea that these increases will somehow stop on their own is an illusion.

But there is hope. The consumer—in this case, the employers and their employees—holds the power to enact change. By demanding greater transparency, exploring high-performance health plans, and stepping away from traditional managed care models that rely on misaligned incentives and inflated pricing, organizations can take meaningful steps to control costs and improve outcomes.

While healthcare and health insurance are complex, consumers don’t need to know all the intricate details. They only need to take their innate consumer behaviors and apply them to healthcare and insurance. They should ask themselves: “Should I be making this decision without the same basic information I expect from every other purchase I make?” Imagine buying a car without knowing the price, the interest rate, or having access to the safety ratings. Yet, this is how many approaches health insurance—with limited information and transparency.

Here are a few ways consumers can make the bleeding stop:

Demand Greater Transparency: Employers can insist on full transparency from their brokers and insurance providers regarding costs and coverage details. This allows them to make informed decisions and spot hidden fees or wasteful spending.
Adopt High-Performance Health Plans: These plans focus on direct contracting with healthcare providers and prioritizing preventive care, which can reduce costs significantly while enhancing employee health outcomes.
Self-Funding and Captive Arrangements: Employers can explore self-funding options, where they pay for actual claims rather than inflated premiums. Captive insurance arrangements can also pool resources with like-minded employers to gain more control over plan design and cost management.
Engage in Value-Based Partnerships: Shift focus from fee-for-service models to value-based care, where providers are rewarded for patient outcomes rather than the volume of services rendered.

Ultimately, it is the employers who suffer the most from this broken system. As premiums continue to rise, wages stagnate because more of the company budget is funneled into healthcare costs. Additionally, the high out-of-pocket expenses for employees can deter them from seeking necessary care, leading to poorer health outcomes over time.

The first step is understanding that the status quo will not change unless we change it. Employers need to look beyond the promises of traditional insurance carriers and partner with those who prioritize value and patient-centric care. We need solutions that don’t just promise to slow the rate of increase but truly transform the model to one that works for people—not just profit.

So, will consumers take the steps necessary to make the bleeding stop? It’s a choice that’s not just essential but inevitable for those who want to break free from the cycle of unsustainable costs.

Questions? Contact the author at lcbernardi@britepathbenefits.com

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