With children back in school and flu season right around the corner, fall is the season when health care and benefits are top of mind for many of us. This is also the time when many employers and individuals begin looking at options for new health insurance plans that will begin in January. This year, some may be in for an unpleasant surprise.
According to the Kaiser Family Foundation’s 2019 benchmark survey, the cost of family health insurance coverage now exceeds $20,000 per year. While health care and insurance costs have been rapidly outpacing inflation for years now, this number is an all-time high. Beyond that, employees’ share of this cost has also risen to over $6,000 per year for family coverage, not including out of pocket expenses. Many employees feel we have reached a point where employer-provided health benefits are hardly a “benefit” of employment at all.
High premiums would be more palatable if consumers had confidence that they would receive high-quality care with affordable out-of-pocket costs. Yet even though premiums are at an all-time high, low-quality care (including provider negligence and waste) and personal medical bankruptcy are still all too common. For example, the National Center for Biotechnology Information suggests that over a quarter of U.S. health care spending is due to overtreatment, repeat hospitalizations, and unnecessary procedures. And nearly ten years after the passage of the Affordable Care Act, two-thirds of personal bankruptcies are caused in large part by medical issues.
Although it’s easy to blame insurers for premium increases, the troubling truth is that costs will remain high until providers and drug companies learn to live with less revenue, patients receive less care, or both. The provider community needs to do more to decrease patient harm caused by low-quality, wasteful care, especially considering the current associated costs. This is not to say that insurance companies, pharmacy benefit managers, and brokers can’t be part of the solution. Indeed, all three are supposed to control costs for their customers and must do better. But the unfortunate reality is that those responsible for managing costs have limited control over the actions of providers and patients. All too often, this leaves them reacting to rising costs rather than leading the way towards better options.
At the very least, health insurance brokers should be more transparent about their role in this dilemma. At present, most are paid by the insurance companies they are appointed with, not their clients who are paying the bills. Brokers who are compensated this way can be tempted by commissions, bonuses, and other rewards offered by insurance companies in exchange for selling their plans. Given that employers rely on brokers to objectively guide them through the process of health benefit selection and help them find cost-effective options, this can create a conflict between the financial interests of the broker/brokerage firm and the client. Until consumers are getting unbiased information from their benefit advisors, it will be all but impossible to tackle the true challenges we face in health care.
