Take a moment and picture the health insurance ID card your employees carry in their wallets. What logo is printed on it?

If you are like most self-funded employers, it probably bears the name of one of the massive, recognizable national carriers. Your employees look at that card and think, “I have my insurance through [Carrier Name].” And unfortunately, far too often, the executive team thinks the same thing.

It is time for a reality check: That carrier is not your insurance company. You are. Fifty years ago, American business leaders staged a quiet revolution. In the 1970s, employers realized that prepaying traditional, fully-funded premiums to insurance carriers was a losing proposition. It meant being subjected to a patchwork of expensive state regulations, paying state premium taxes, and handing over the cash flow advantages of holding capital. Worst of all, it meant that when a workforce was healthy, the insurance company kept the savings as profit. In the process, The Employment Retirement Income Security Act (ERISA) was born, federalizing self-insurance options. Employers rejoiced.

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At its core, the move to self-funding was a fight for control. It was an effort by employers to assume their own risk, bypassing the traditional insurance apparatus, and becoming the fiduciary masters of their own healthcare destiny.

But, over the last few decades, a brilliant and destructive sleight of hand occurred.

The legacy carriers realized they were losing their premium revenue to self-funded employers. In response, they pivoted to offering Administrative Services Only (ASO) contracts allowing employers to “outsource” management of their health plans to them, effectively handing control right back to those they fought so hard to wrestle it from.

Over time, these ASO models became fiercely vertically integrated. The carriers bought the Pharmacy Benefit Managers (PBMs), the clinics, and the data analytics firms. They bundled everything together into opaque, take-it-or-leave-it packages.

By adopting these vertically integrated ASO models, you are ceding the very control your predecessors fought for 50 years ago. You are no longer managing your own plan; you are simply bankrolling a legacy carrier’s profit margin while letting them dictate the rules and hide the actual costs.

That logo on your employee’s ID card? It isn’t an insurance company. It is simply the name of a provider network and administrative middleman that you are drastically overpaying.

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True self-insurance is not about financing a carrier’s black box; it is about unbundling the services, demanding radical price transparency, and actively managing your supply chain. It requires remembering that the money paying the claims is yours, the plan document is yours, and the ultimate responsibility to your employees is yours.

To fix your healthcare spend, you first have to remember who the insurer actually is. All you have to do is look in the mirror.

For decades, policymakers and industry leaders have touted value-based care (VBC) and risk-based payment models as the cure for America’s healthcare woes. These concepts dominate conferences, white papers, and legislative agendas. But let’s be honest, they’re distractions—red herrings that divert attention from real solutions. Worse, they create inefficiencies, waste resources, and ultimately reduce access to care while transferring wealth from patients to bureaucracies.

The U.S. healthcare system is the most expensive in the world, consuming more than $5 trillion per year. Layer on top of that the cost of implementing VBC and risk-based models—consultants, compliance systems, and analytics platforms—and you have a bureaucracy that rivals the clinical enterprise itself.

Market engineering is a flawed premise

If market engineering worked, we’d have solved housing affordability with “value-based mortgages” or food insecurity with “risk-adjusted grocery pricing.” Imagine charging more for processed foods because they pose higher health risks. We couldn’t even regulate sugary soda in New York City, yet we think we can redesign the entire healthcare economy. Crazy, right? Welcome to America!

Efficient markets don’t come from government tinkering. They emerge from competition, transparency, and consumer choice. Every time we layer on artificial constructs like VBC, we distort incentives and stifle innovation.

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What is value and who decides?

The term “value” sounds noble, but who defines it? Regulators? Insurers? The AMA? History offers one answer: customers define value, and in healthcare, that means patients. It seems the Chairman of the Senate Healthcare Committee has similar questions.

Is value a cure at any price? Is it three extra years of life that bankrupt a family? Or a few more months of painful survival? These are deeply personal questions, not actuarial calculations. Yet VBC frameworks often prioritize payer ROI over patient autonomy, while ignoring the “voice of the customer.”

Even the Centers for Medicare & Medicaid Services acknowledges the complexity: its new models aim for 100% Medicare beneficiaries in accountable-care relationships by 2030, but fewer than half of U.S. primary care physicians currently receive VBC payments. Let’s hope they figure out that it’s a nonsensical path before it goes too far.

The bureaucracy burden

Risk-based models create entire industries devoted to managing risk, calculating trade-offs, and gaming metrics. Hospitals hire teams to optimize coding and negotiate shared savings. Consultants thrive on the complexity. Meanwhile, patients wait longer for care because providers are busy meeting documentation requirements.

Perhaps most importantly, there’s no evidence that VBC models work at scale. Imagine if it turns out to be untrue, what does that mean for economics? I believe it would totally upend economics as we know it.

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The American contradiction

America’s economic strength lies in free markets. Yet healthcare is the least American part of our economy. It’s dominated by regulation, opaque pricing, and engineered payment schemes. Until we restore market principles such as price transparency, consumer choice, and competition, we’ll keep chasing illusions instead of solutions.

Healthcare reform should not be an exercise in market engineering. It should be a recommitment to the principles that built America: freedom, choice, and accountability. Until then, “value-based care” will remain what it is today—a well-intentioned but misguided experiment that costs too much, delivers too little, and distracts us from the true problem.

Are you paying more for healthcare than you should because of how your advisor gets paid?

Most employers would say no. After all, you hired a benefits consultant; they quoted you a flat fee or a per-employee-per-month rate, and you signed the contract knowing exactly what you’re paying.

Or do you?

Odds are, you don’t.

For consultants who work on commission or hybrid models, the fees disclosed in your contract are just the tip of the iceberg. Behind them sits a network of payments, bonuses, and perks that many employers never see. This is where significant money often flows, and it can push up both your costs and those of your employees. The wrong design of your plan can also tie your hands, preventing you (or your employees) from controlling costs as you’d like.

If you’re signing off on benefits decisions, you need to know your consultant’s full compensation structure, not just to control costs, but to make sure the advice you’re getting serves your interests and to stay on the right side of your fiduciary obligations to your employees.

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Commissions built into premiums

Some employee benefit consultants supposedly work on a “fully transparent,” fixed fee basis, forgoing commissions for the very purpose of telling you that’s exactly what they do. But did you know they often receive bonuses (not commissions ) for hitting key milestones such as securing your renewal or bringing in a certain number of new customers?

They are supposed to provide you with an estimate of these bonuses, and they are supposed to update you as those estimates change. When was the last time you saw such an estimate?

And then there are the other products you offer to your employees. Do you know what commissions your broker earns on the voluntary benefits they sell to your employees? Those would be your vision plan, dental plan, critical illness or accident indemnity plan, among others. By creating the façade of transparency on your medical plan, you open the door to all kinds of other abuse.

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Overrides and retention bonuses

For commission-based consultants, standard commissions are just the start. Many carriers also pay overrides. These are bonus payments for bringing in new business or keeping existing clients from switching. However, these bonuses aren’t based on your account alone; they can be tied to a consultant’s total volume across their entire book of business with a carrier. That empowers your broker to rationalize why it’s none of your business. But, of course, it is.

Here’s what makes overrides particularly problematic: they are often all-or-nothing. If a consultant needs to write a certain amount of new business or keep a certain percentage of clients renewing, and they fall short, the entire bonus disappears. Your renewal might be the account that pushes them over the threshold or causes them to miss it.

That can create real pressure to keep you with certain carriers, even when switching would save you money or get you better coverage. These payments can be substantial, sometimes rivaling or exceeding the base commission, and they pay month after month as long as the consultant maintains their volume targets.

These numbers seldom appear in proposals or contracts, but they help explain why the same carriers keep showing up at renewal, year after year.

Point solution vendor fees

Mental health platforms; diabetes programs; wellness apps... the list goes on. The point solution market has exploded, and many vendors pay consultants to get in front of employers.

Each time a consultant introduces a new tool, they may receive referral fees, marketing allowances, or a per-employee placement bonus. The pitch sounds good—this platform will fill a gap in your plan, engage your employees, and improve outcomes, but what you don’t see is the check the vendor writes to your consultant for making that introduction.

The next year, there’s often a different vendor solving the same problem with a new tool and a new payment. They’ll call it innovation or staying current with best practices. What it really creates is churn: a rotation of vendors that generates fees without necessarily improving your employees’ experience or your plan’s performance.

Without full disclosure, you have no way to know whether a recommendation is driven by what your population needs or by what the vendor is willing to pay.

Pharmacy and stop-loss rebates

If you’re self-funded, there may be additional layers. Some consultants collect rebates from pharmacy benefit managers, stop-loss carriers, or both.

PBMs may pay consultants through rebates, administrative allowances, or performance bonuses tied to formulary compliance and prescription volume—what drugs your employees use and how often. Stop-loss carriers may pay performance bonuses tied to claims management or retention. These payments are rarely disclosed, even though they can materially affect what you end up paying for drugs and coverage.

In these arrangements, consultants are supposed to be negotiating contracts on your behalf. Instead, they may be getting paid by the same vendors you’re trying to negotiate against.

Trips, dinners, and appreciation events

Not all compensation shows up as a check. Carriers fly consultants to conferences in resort locations. They host dinners at steakhouses. They send gift baskets, tickets to games, and invitations to exclusive events. Individually, these perks may seem minor compared to six-figure commission checks.

While many companies have conflict-of-interest rules for vendors that may apply to you, they don’t apply to your benefit consultants. Over time, these perks build loyalty to certain carriers and vendors. And that makes it harder for a consultant to walk away or recommend you do the same.

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“Free” technology that isn’t free

Many consultants offer benefits administration platforms at little or no cost. Enrollment tools, eligibility tracking, and employee portals are all included as part of the service.

Sounds great, right? Except someone has to pay for that technology. In many cases, carriers and vendors subsidize the platform in exchange for your consultant steering business their way. You’re paying for it through steered vendor selection and limited options.

Once you’re using the platform, switching becomes a hassle because your data lives there, your employees are trained on it, and your HR team has built workflows around it. The harder it is to leave, the easier it is for consultants to keep you with the vendors funding the technology, regardless of whether those vendors are the best fit for your plan or not.

Why this matters to employers

Under the Employee Retirement Income Security Act (ERISA), you have a fiduciary duty to act in your employees’ best interests when making benefits decisions. If you’re taking advice from someone with undisclosed financial conflicts, you’re not meeting that duty, and courts are paying attention.

“We didn’t know” isn’t a defense anymore. Employers who fail to demand transparency are increasingly being held liable for breaching their fiduciary obligations. The penalties are real.

I’ve been hard on brokers and benefit consultants lately. If you’ve followed my writing, you might conclude that I don’t like them, or that I view them with a certain level of disdain. To an extent, you’d be right, but it’s not the people I lack respect for. It is the system they inhabit and, by extension, the companies that demand their silence.

I learned this the hard way.

Back in 2018 and 2019, I was in the trenches of the efforts to bring real price transparency to healthcare. I authored legislation and a citizen ballot measure in Colorado. I played a significant role in shaping what we now know as the ‘Transparency-in-Coverage’ rules, the product of a June 2019 Executive Order.

During that time, I met hundreds of stakeholders, and I never met a single person who vocally opposed price transparency in private. Yet my first two efforts were defeated.

If you’re scratching your head, you should be.

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The two faces of the C-suite

I sat down with lobbyists, hospital CEOs, and insurance executives. Behind closed doors, over coffee or a beer, the sentiment was universal: “David, I agree with you. I really hope you get this done.” But when testimony began at legislative committee hearings, there was total silence from the people I’d spoken with, and in some cases, active opposition from the organizations they represented.

One hospital CEO told me flatly: “If I publicly support your efforts, my board will likely fire me.” I knew he wasn’t exaggerating.

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Where are the “real people”?

In the U.S., we have what we call “third rail issues”—topics so divisive that touching them can end a political career: guns, abortion, immigration, and so forth. On those issues, there are “real people” who will stand in the rain to protest for what they believe in. Many will even fight. There is a core of genuine, passionate humanity at the center of the debate. You can disagree with them, but you can’t deny they exist.

The fight for healthcare price transparency was different. There were no “real people” on the other side.

Think about it. No father sits at his kitchen table and says, “I really hope we keep hospital pricing a secret so I can be surprised by a bill next month.” Likewise, no mother advocates for the right of an insurance company to hide its negotiated price.

The opposition I faced wasn’t human. It was a ghost—a collection of corporations, shareholders and the associations they hire to do their bidding. They have no pulse, no soul, just bottom lines to protect.

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Survival vs. cowardice

Are the people who believe in price transparency but won’t support it publicly cowards? It would be easy to say yes, but I’ve come to understand that for most, it was more a matter of survival.

Insurance brokers and benefit consultants at the large agencies often find themselves in the exact same boat. While smaller independent brokers have the freedom to steer their clients in new directions, those at the “Big Houses” are often trapped. Bucking the system is fraught with peril. If a consultant speaks up, they put the firm’s financial incentives and carrier overrides at risk, and in turn, they put themselves at risk.

In private, these brokers tell me they know their clients are being fleeced. They admit the system is broken, but when push comes to shove, they often toe the party line.

Some are starting to break free, one-by-one, but in many cases it’s because they need to, not because it’s the right thing to do. Only when faced with the risk of losing a client after a year of big hikes in healthcare costs do they put true change on the table. They might not be cowards, but they’re also not showing courage. Courage would be proposing changes when it’s right, not when it’s required. That’s what a true, trusted advisor would do.

Brokers aren’t “bad people,” but they do work in a bad system—a system that has made honesty and transparency a liability. Until we change the incentives that force good people to act like cowards to survive, the “ghost” will keep winning.

It warrants repeating, I don’t hate brokers and benefit consultants. In fact, I like most of them—behind closed doors. What I hate is that the system won’t let them step into the light.

If you’re a broker reading this and you’re trapped in that system, know that there’s a way out. The employers who will value you most are the ones looking for honesty, not compliance.

And if you’re an employer waiting for your broker to bring you the truth? Understand that if they’re stuck in this system, they can’t save you, no matter how much they might want to.

This weekend, eight NFL teams will fight for an ultimate spot in the Super Bowl. That’s what fans will see. What they don’t see are the war rooms across the league, deep into draft preparation—evaluating talent, building boards, and working through scenarios. The draft doesn’t happen until late April, but the teams that win on draft day are the ones that started preparing months earlier. Those with the highest draft picks aren’t playing this weekend. They are even more earnestly focused on the draft.

In the first round, teams get eight minutes to pick. That’s it. Months of work will come down to a decision made under pressure, one that shapes the roster and often the season that follows. Sometimes, the player a team built its strategy around is unexpectedly scooped up by a team with an earlier pick. Other times, a prospect they expected to go early in the draft is still on the board. Either way, the clock keeps running.

That kind of pressure isn’t unique to football. Business leaders are on the clock right now, too, though many don’t realize it yet; not to draft players, but to draft their next broker or benefits consultant. That work needs to happen now, in Q1 and Q2, before renewal season hits in September and October. And if all goes right, they might choose to re-sign their broker, much as an NFL team might re-sign a player they thought they’d lose to free agency. Whether drafting new, young blood or re-signing a veteran, there are choices to be made.

Most companies wait until summer to consider reevaluating their relationship with their broker. By then, the best advisors are already committed, and renewal season becomes about who’s available, not who you actually want to work with.

This year is different. Turnover among brokers and consultants is accelerating. A fifty percent shift wouldn’t surprise me. The advisors who know how to navigate what’s coming are already being selective about who they work with this year. I love working with them. They tend to be independent brokers or, at least, independently-minded brokers at larger agencies. They know what needs to be done this year. There are still some good guys left.

If you call a broker you’ve never spoken to in a panic in September, you’ll be too late, or you’ll be ripe for being taken advantage of.

The good ones will have been drafted.

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The pressure is real

2025 delivered the steepest healthcare cost increases in over a decade. Aon and Willis Towers Watson (WTW) are projecting 8% to 14% increases again in 2026. Many saw numbers well beyond 20% in 2025. There will be many of those in ’26, too.

The problem wasn’t just the size of the increases, it was when they arrived. Renewal quotes showed up in September or October, leaving employers without time to think or room to maneuver. That’s like waiting until 30 seconds are left on the draft clock to start rethinking your pick.

Once renewal hits, you’re effectively locked in for another year. Brokers understand this dynamic. Clients churn eventually, it’s inevitable, but timing is everything. If they can string you along with promises until October, they’ve won another year.

That strategy has worked for a long time. The average broker tenure hovers around five years. COVID-19 disrupted the market in 2020, which triggered a wave of broker changes in 2021. Five years later, those relationships are hitting their expiration date, just as employers face back-to-back cost increases that make the status quo unsustainable.

The pace of change and turnover in 2026 is going to break records.

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Your next move

The broker market is about to get selective. The consultants who understand what’s coming won’t have room for everyone. I’d put the number who are really willing to do what’s right for their client at about 5%. Those are the ones you want to draft, or re-sign.

If you’re three or more years into a relationship that isn’t delivering, the window to change course is Q1 and Q2; not because there’s a magic deadline, but because by summer, the best options will already be committed. You don’t want to be that team that is going into the preseason but hasn’t picked a starting quarterback yet. That doesn’t usually bode well for an NFL team, and it won’t bode well for you.

Your renewal will arrive in September, whether you’re ready or not. The only question is whether you’ll be ready to receive the bad news from a position of strength or weakness.

Remember, you are on the clock.

In the NFL, general managers don’t get many chances to draft a franchise quarterback. Miss once, and you set the team back years. Miss twice, and you may not get a third shot.

Most HR leaders are in a similar position, whether they realize it or not.

Over the course of a career, an HR executive or chief financial officer might oversee one, maybe two broker or benefits consultant selections. That’s it. Meanwhile, brokers and consultants participate in dozens of competitive selection processes each year. They know the timing, the pressure points, and how to manage expectations to control the process.

You’re being asked to make one of the most important decisions affecting your workforce and your balance sheet with minimal practice, while the people on the other side of the table do this for a living.

That’s a lopsided game.

The general manager problem in HR

In football, the GM doesn’t call plays or throw passes, but the season hinges on their decisions. How they build the roster, how they manage the salary cap, and who they draft in the first round. Miss at the top, and no amount of execution can save you.

Choosing a benefits broker carries the same weight. Your broker touches everything: plan design, cost containment, vendor strategy, renewals, and employee experience. If they’re not performing at a high level, you’ll pay for it at every renewal for years.

NFL general managers spend their careers evaluating talent and living with the consequences. Even then, drafting a quarterback is different. It’s the pick that defines their tenure.

Most HR leaders never get that kind of practice. And the game has changed dramatically since the last time you made this pick.

That’s the seat you’re in right now.

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What’s changed since your last selection?

If you last selected a broker five or six years ago, you weren’t choosing for today’s market.

At the time, many of the tools that now define an effective benefits strategy either didn’t exist or weren’t meaningfully deployable, including:

• GLP-1s

• Transparency-in-Coverage Rules

• EHR interoperability

• Reference-based pricing

• Virtual primary care

• Commodity drug plans

• At-home lab tests

• Most wearable technologies

• Lifestyle spending accounts

• Direct provider contracting

• International drug sourcing

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Comfort is the most expensive mistake you can make

The average broker relationship lasts about five years. Not because five is optimal, but because it’s tolerable.

During COVID-19, broker turnover spiked in 2021 as employers scrambled to respond to chaos. Five years later, those relationships are aging out just as costs surge again, and the margin for error disappears.

Comfort is the problem. Long-tenured relationships tend to dull the sense of urgency. Meetings get smoother and expectations soften. “We’re working on it” starts to sound like progress. Meanwhile, renewal season arrives exactly on schedule, while your options quietly vanish.

Signs your broker isn’t performing

A franchise quarterback elevates everyone around them. An average one forces the rest of the team to compensate.

Your broker should do the same for your benefits strategy. Here are the signs they’re not:

1. They did not present you with at least one non-BUCA option in 2025. 

2. You’re still paying full price for brand-name GLP-1 drugs like Ozempic or Wegovy.

3. Your PBM charges copays that exceed the actual cost of many drugs.

4. You don’t have full transparency into drug rebates.

5. You don’t have a strategy for sourcing high-cost drugs internationally.

6. Your employees are paying out-of-pocket for basic telemedicine visits.

7. You don’t have a service to help move your highest cost claimants to government funded programs. 

8. You still have a useless Employee Assistance Program. 

If your broker hasn’t addressed these gaps, they’re not keeping pace with the market.

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What good decision-makers do

Great general managers don’t pretend to know everything. They build boards, they challenge assumptions, and they surround themselves with people who see the field differently. Most importantly, they act early.

You’re not expected to understand every corner of American healthcare. Nobody does. But you are expected to recognize when the game has changed, and whether the person you’ve trusted to guide you is actually doing their job.

You are the general manager here. Your broker is the quarterback. This season is going to force a decision, whether you make it deliberately or let renewal season make it for you.

The Seattle Seahawks and the New England Patriots earned their way to the Super Bowl this past weekend. At this level, everyone has talent. What separates the winners from everyone else? If you watched the games, you saw it in action. Preparation is the difference. Quarterbacks reading the defense; coaches calling the right plays; defenders anticipating where the receiver is going … it’s all about being prepared. When a quarterback walks to the line, he already knows what’s coming. At least that’s the goal. The other team’s job is to be one step ahead—anticipating what’s being anticipated.

You need the same approach with your benefits broker right now. Employee benefits has become a game, and you have to play to win. In an industry with words like, “revenue cycle management,” it should be apparent by now that in the game of employer sponsored healthcare, your opponents (brokers, carriers, and health systems) are playing to take as much money as they can from your company and its employees. You have to play the other side of that, keeping them from doing so. You need to play to win.

You’re likely to hear from your broker earlier than usual this year. Some are terrified of losing clients. Others will see an opportunity to take your business from someone else. Either way, you’re about to get bombarded.

Expect outreach to start in Q1. Meeting requests will pile up through Q2. By summer, it could be a frenzy.

Will you be a company in control, or will you fall into the same pattern for another year by mismanaging the clock?

The play they’re about to run

In football, the GM doesn’t call plays or throw passes, but the season hinges on their decisions. How they build the roster, how they manage the salary cap, and who they draft in the first round. Miss at the top, and no amount of execution can save you.

Choosing a benefits broker carries the same weight. Your broker touches everything: plan design, cost containment, vendor strategy, renewals, and employee experience. If they’re not performing at a high level, you’ll pay for it at every renewal for years.

NFL general managers spend their careers evaluating talent and living with the consequences. Even then, drafting a quarterback is different. It’s the pick that defines their tenure.

Most HR leaders never get that kind of practice. And the game has changed dramatically since the last time you made this pick.

That’s the seat you’re in right now.

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If you want to keep your current broker

If you like your current broker and want to give them a chance to step up, ask them to come clean. Tell them the gig is up and challenge them to present the solutions they should have been bringing all along—alternative insurance models, drug cost strategies, modern vendor approaches—not just maintenance or minor adjustments.

Set a hard deadline: May, or June at the latest. If they can’t deliver by then, you’ll know where things stand, and you’ll still have time to make a change before summer, when your best options start disappearing. Wait any longer than Q2, and you’ll find yourself locked in for another year.

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If you’re ready to evaluate alternatives

Start now. Begin educating yourself on what’s changed in the market; understand what modern benefits strategies look like and what questions to ask. If you don’t start this process immediately, the odds of making meaningful changes in 2026 drop to nearly zero.

The brokers who understand what’s coming are already being selective about who they work with. They’re choosing their clients now, in Q1 and Q2. By summer, they’ll be committed.

Championship teams study film because they know what’s coming before it happens. They don’t wait to see the formation and then react. They prepare.

You need to do the same.

You’re on the clock; and the clock is ticking!

The Super Bowl is this weekend, but for most NFL teams, the season is already over. Thirty teams are out. Their focus has shifted from winning games to building next year’s roster.

That means making hard decisions. Which players stay. Which ones go. Which expensive contracts get restructured or cut entirely, even if it means paying players who won’t be on the team.

The cost of paying out a player’s contract after you’ve released them or traded them at a discount is called dead cap money. From fans to the front office, everyone universally hates it. Paying millions to players who aren’t contributing feels like pure waste.

It’s painful, but teams do it all the time. Why? Because keeping the wrong player in place costs even more.

A lesson from the Denver Broncos

The Denver Broncos paid Russell Wilson $53 million in 2024 and another $32 million in 2025 even though he left the team at the end of the 2023 season. That’s $85 million in dead money for a quarterback who wasn’t even on their roster.

In 2024, the NFL salary cap was $255.4 million. Denver’s $53 million dead cap payment that year represented more than 20% of their total cap, an enormous number by any standard.

They did it anyway, and they are [clearly] better for it. This season, the Broncos won their first division title in a decade.

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Your dead cap problem

Many companies are facing the same decision with their benefits broker or consultant. They’re locked into multi-year contracts that felt reasonable when they were signed. At the time, the relationship worked or worked well enough. Now, the relationship isn’t delivering, but breaking the contract feels expensive enough to justify staying the course for another year.

If this feels familiar to you, don’t let the wrong question start driving your decision.

The first question to ask isn’t “What will it cost to release the current firm?” It’s “What will it cost not to?”

Consultant fees typically show up as a fixed amount (say, $500K annually) or a PEPM (per employee per month) structure. As a general rule, if that number exceeds 5% of your healthcare spend, you’re overpaying. Even at 10%, the upper limit for smaller companies, eating the cost could still make financial sense.

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The more expensive mistake

The termination fee is easy to see. It’s right there in your contract. The cost of maintaining the relationship isn’t. It’s spread across renewals, pharmacy spend, vendor contracts, and missed opportunities over the next two to three years. And it’s often much larger.

Not every dollar of healthcare inflation is controllable; experienced HR leaders know that. But some of it is structural, and that’s where underperforming relationships compound.

That $1,000 to $3,000 per employee we’ve mentioned throughout this series? It compounds every year. For a company with 500 employees, that’s $500,000 to $1.5 million annually in missed savings, inefficiencies, and unmanaged risk.

Your dead cap payment might be $200,000 or $300,000. Painful? Absolutely. But compare that to ongoing annual costs in the six, seven and eight-figure range. In many cases, one more year with an underperforming consultant can cost more than several years of dead cap payments.

That’s a calculation most employers never sit down and do.

When to walk away

Sometimes, you have to eat the dead money.

None of this means you should fire your broker tomorrow. But the cost to break your contract is not a valid reason to delay change when the relationship isn’t working.”

If your consultant hasn’t brought you solutions that other employers are already using—alternative insurance models, modern pharmacy strategies, accountable vendor approaches—staying means more years of rising costs with nothing to show for it.

At some point, you have to decide whether you’re paying for continuity or paying for progress.

NFL teams make their biggest roster decisions in the offseason because waiting until the season starts limits their options. The same is true here.

Your renewal will arrive in September whether you’re ready or not. You need to decide whether you’ll let the fear of dead cap money keep you stuck for another year with a consultant who isn’t delivering.

Championship teams don’t cling to sunk costs when better options exist. Neither should you.

You’re on the clock.

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If you haven’t already, read the entire series of ‘You’re On the Clock’ and share it with an HR leader who could benefit from it:

Part 1: The Draft for Your Next Benefits Broker Starts Now
Part 2: Are You Ready to Draft a Franchise Broker?
Part 3: The Blitz Is Coming

This was a tough year for everyone. Premiums went up, deductibles climbed, and employers found themselves paying more while their employees received less. Unfortunately, the warnings for 2026 don’t look any better. Total health benefit costs are expected to rise by 6.7%, pushing the average per-employee spend above $18,500, which is well ahead of wage growth and inflation. Meanwhile, somewhere in Washington, politicians will promise solutions. We all know they won’t deliver, because they can’t. More on that later.

First, a quick confession: When three-letter abbreviations started to dominate text messages nearly two decades ago, I was a little slow on the uptake. For years, I thought LOL meant “lots of luck,” and that’s how I used it. It wasn’t until a bewildered friend replied “HUH?” that I learned everyone else used LOL to mean “Laugh out loud.”

It was a small misunderstanding, but it stuck with me. Sometimes the best intentions meet a system, or a culture, that doesn’t work the way you expect. Case in point, American healthcare. A system this massive, this expensive, and this disconnected from the people it’s supposed to serve can leave you shaking your head, or sometimes wanting to LOL, because the only reaction left is to laugh.

However, to the politicians who keep promising they’ll “fix” American healthcare, I still say, “Lots of luck.”

The rest of this article comes with another LOL: “Lots of love.” Because I truly hope it opens eyes. We will never make any progress until we acknowledge the true drivers of our healthcare costs. Right now, I don’t hear anyone talking about the real problems.

Out of love for every American, I pray that everyone embraces the need for greater understanding.

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The bill that keeps growing

That $18,500 figure isn’t an anomaly. It’s the fourth straight year of increases above 5%, following a decade when costs grew around 3% annually. In 2025, premiums rose faster than employees’ wages, forcing employers to raise deductibles, hike copays, and shift more costs onto workers who can least afford it. Next year won’t be any easier. Employees’ share of coverage costs typically rises at the same rate as total costs, meaning affordability will be an even bigger challenge.

Employers are already doing everything they can, building narrower networks, adding plan options, and following their brokers’ advice. It’s not enough.

Policymakers in Washington will continue promising relief—another bill, another reform, another administrative “fix” that will finally bend the cost curve.

They’re lying to you. Not maliciously, perhaps, but lying nonetheless. As uncomfortable as it may be to acknowledge, the truth is our government cannot engineer a better healthcare system. It has never been capable of doing so, and every time it tries, your costs go up.

The unvarnished history of modern American healthcare 

If you want to understand why healthcare costs keep rising, you have to look outside of healthcare. The system you’re paying for today didn’t start in a hospital; it started with our military.

In the early 1900s, the U.S. Department of War (renamed the Department of Defense, and now back to the Department of War at an estimated branding cost of $2 billion) formalized the use of cost-plus contracts, the practice of reimbursing contractors for all approved costs, plus an additional profit.

They were widely adopted during World War I and World War II to encourage businesses to produce war materials quickly without worrying about the unpredictable costs of materials and labor during wartime. Then, throughout the Cold War, cost-plus contracts were used to build military capacity at any cost. Regrettably, they delivered more than might; they delivered waste in the form of billion-dollar overruns and $640 toilet seats because there was no incentive to control costs. The more they spent, the more they earned.

In his famous farewell address, President Eisenhower warned us about the military-industrial complex, cautioning that it would breed inefficiency, runaway spending, a lack of market discipline, and corruption.

Then, in 1965, Congress made the same mistake with healthcare.

When Medicare launched, it adopted cost-based reimbursement. Hospitals were paid for all “reasonable costs” plus a margin, just like defense contractors. There was no penalty for spending more, no connection to value, or pressure to be efficient.

Costs exploded.

Just as the defense industry led all other nations with unmatched spending, Americans soon found themselves leading the world in healthcare expenditures. The same public that once took pride in military investment came to disdain the spiraling costs of healthcare. The paradox stems not from the nature of the service, defense versus health, but from the persistence of a reimbursement method that rewards volume rather than efficiency or value.

The defense industry eventually learned. Slowly and grudgingly, it has moved in recent years toward competitive procurement. Healthcare has yet to learn its lesson. The cost-plus mindset remains embedded in every payment system, every regulation, and every reform. And why not? The result is very lucrative.

The 1983 “fix” that created the billing industrial complex

By 1983, Medicare spending was spiraling out of control. Congress panicked. They needed to rein in costs. Instead, they responded by doubling down on intervention. The Prospective Payment System (PPS) and Diagnosis-Related Groups (DRGs) were introduced, which paid hospitals a fixed, predetermined amount for each case regardless of actual costs.

In theory, this should have worked. Hospitals would have an incentive to provide care efficiently, since they’d keep the difference between the fixed payment and their actual costs. But hospitals are businesses, and we all know businesses don’t accept lower revenues. They find ways to adapt. Although it was unintended, in hindsight, what followed was entirely predictable:

1. Upcoding became an industry.
   If Medicare paid more for a complex case than a simple one, hospitals documented more complexity. Medical coding systems, once a simple tool for categorizing diseases, became the central financial instrument of healthcare. Entire departments were built around maximizing “case-mix index” and documenting the most severe diagnosis that could be justified.

2. Care shifted to less regulated outpatient settings.
   Until recently, DRGs only covered inpatient care, so hospitals moved procedures to outpatient facilities, ambulatory surgery centers, and other venues where they obtain more generous reimbursements.

3. Consolidation accelerated.
   Larger hospital systems could hire more coders, negotiate better rates with commercial insurers, and achieve economies of scale in gaming the payment formulas. Regional health systems merged into near-monopolies. As a result, competition decreased and healthcare prices went up.

4. Administrative costs skyrocketed.
   The complexity required to navigate DRG payments, document for maximum reimbursement, and manage multiple payment models required armies of administrators. Healthcare’s administrative burden is now a material driver of spending.

Rather than driving costs down, the government-imposed payment system industrialized revenue optimization. Sadly, patient care was no longer the central goal. Navigating a complex web of codes and rules to protect financial margins became the administrative focus.

Every one of these adaptations was a rational business behavior. That said, I don’t believe the system was broken by market forces. Healthcare was broken by payment models that were designed by people who didn’t understand markets. These models were then embraced by those who understood all too well.

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States added accelerants to the fire with anti-competitive regulations

While Medicare was creating perverse incentives, states were busy erecting barriers to competition. Certificate-of-Need (CON) laws were passed in most states, ostensibly to prevent “overbuilding” of healthcare facilities. The theory was that too many hospitals would lead to wasteful duplication and higher costs.

The reality was the opposite. CON laws require anyone wanting to open or expand a healthcare facility to first obtain government permission. They must prove that the community “needs” the facility. Existing hospitals get to weigh in, essentially giving incumbents veto power over potential competitors.

This is not how markets work. In a functioning market, if an incumbent is overcharging or underperforming, a competitor enters and takes market share. The threat of competition disciplines prices and improves quality.

CON laws eliminate that threat. They protect established hospitals from new entrants. They ensure that regional monopolies can maintain high prices without fear of being undercut.

Far from controlling costs, these laws fostered the very market consolidation that drives prices higher today.

You’re paying those monopoly prices right now.

The ACA doubled down on a broken system

Fast forward to 2010. Healthcare costs are still rising and millions lack insurance. Washington promised a comprehensive solution that we’ve all come to know as the Affordable Care Act (ACA).

The ACA succeeded in expanding coverage. That’s worth acknowledging, but expanding coverage inside a dysfunctional economic model doesn’t make that model work. The ACA treated a symptom, lack of insurance, while leaving the underlying disease untouched: distorted pricing, consolidated market power, disconnects between supply and demand signals, and decades of misaligned incentives.

You likely noticed your premiums didn’t go down after the ACA. They went up. Your employees’ deductibles and out-of-pocket expenses didn’t shrink, they grew. Now, for those eager to blame the ACA and call for its repeal: don’t misread this as a political critique. The ACA is a minor player in a sixty-year story of structural failure. It didn’t create the broken system. It tried to expand access within it. That was a fool’s errand.

Repealing the ACA without confronting the foundational problems would simply unleash chaos. You’d expose millions to the constraints of the same broken system the ACA, however imperfectly, tried to address. The DRG-based administrative pricing would still be there, the revenue-optimization incentives would still be there, and the anti-competitive barriers would still be there.

The problem isn’t that the ACA didn’t go far enough. The problem is that it marched further in the wrong direction toward more complexity, more administrative control, and more government engineering of a system that cannot be centrally planned.

So where does that leave us?

The current trajectory is not sustainable. Healthcare now consumes 17.6% of GDP. By 2033, it will reach 20.3% ($8.6 trillion). One-fifth of everything we produce will go to healthcare.

This means your costs will continue rising faster than your revenues, your employees will shoulder more of the cost, and your ability to invest in wages, technology, and growth will continue shrinking.

If we haven’t already, we are reaching a tipping point. Something is going to break. Either employers will stop offering coverage, triggering a crisis, or the government will impose price controls, triggering shortages and rationing.

What would fix this?

Each layer of bureaucratic engineering, from payment systems to price controls, has failed. This is because a system as dynamic as healthcare cannot be centrally planned. Every administrative “fix” creates new loopholes and prompts compensatory behaviors that lead to more complexity and cost, requiring yet another layer of regulation.

It is a fallacy to believe we can engineer our way to affordable healthcare. Greed is a human constant, present in any economic system. The function of a true market is to harness self-interest through competition, forcing providers to compete on price and quality to win customers. Our current system does the opposite; it rewards navigating bureaucracy.

If we are serious about fixing healthcare, we must start trying to liberate it. A genuine market-based solution would require bold, fundamental changes:

1. Radical price transparency: Prices for services must be simple, clear, and available upfront, allowing patients to shop for care just as they do for any other good or service. Not buried in chargemasters. Not negotiated in secret. Transparent.

2. Elimination of anti-competitive barriers: Repealing CON laws and other regulations that limit the entry of new, innovative providers would unleash competitive pressure on established players. We need to let competitors enter and let the market work.

3. Consumer-directed financing: Empowering patients with tools like Health Savings Accounts (HSAs) combined with catastrophic coverage insurance plans restores their role as active consumers, making them sensitive to the cost of routine care.

4. Pro-competition rules: Outlawing contracting clauses that prevent insurers from steering patients to lower-cost, high-quality providers would enable true price competition.

And, yes, the coding system has to be blown up.

These are the pillars for a functioning market. The path to affordable, high-quality healthcare lies in dismantling the broken administrative state that created this crisis and finally allowing the discipline and dynamism of the free market to work.

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What employers can do now

Change will not come from legislation. It will come from employers who refuse to keep funding a broken system. So, what can you do right now? More than you think.

1. Demand real transparency. Not “chargemaster” prices that no one pays. Demand real prices for the care your employees receive. If a hospital won’t tell you what a procedure costs before it’s performed, you shouldn’t contract with them.

2. Steer to value, not networks. Stop buying broad networks full of high-cost, low-quality providers. Build narrow networks around providers who deliver outcomes at reasonable costs and exclude those who don’t.

3. Stop negotiating from weakness. You’re one of the largest purchasers of healthcare in your market. Act like it. Reference-based pricing, direct contracts, centers of excellence—these tools exist. Use them.

4. Make healthcare a C-suite issue. This is no longer an HR benefits problem. It’s a strategic business issue that belongs in the CFO’s portfolio. Manage it like you manage any other major expense.

The path forward won’t be smooth. Incumbent providers will push back, but doing nothing guarantees your costs will keep rising at rates that threaten your business.

It’s time to choose love

No one wants to hear that sixty years of government intervention cannot be fixed with better government intervention. We want to believe that problems have solutions and that experts can engineer better outcomes.

But it’s true, nonetheless.

The only force powerful enough to fix American healthcare is the one we haven’t truly tried: genuine market competition, where prices are transparent, consumers have choices, and providers compete on value.

It’s time to start preparing for your 2026 renewal. So, here is my final LOL:

Lots of luck if you’re waiting for Washington to rescue you. You’ll need more than luck to survive rising premiums, higher deductibles, and costs that climb faster than wages.

Laugh out loud if you must at the absurdity of a system this expensive, this complex, and this administratively bloated. Sometimes disbelief is the only rational response.

But most of all Lots of love.

Because if we truly care about our companies and the future of America, we can’t just laugh and hope. We must act. That means demanding transparency, building competitive networks, and negotiating with strength. Most of all, treat healthcare like the strategic business challenge it is.

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Share this with every CFO, HR leader, and business owner who’s tired of being told the next administration will finally fix healthcare. Drop me a line at David.Silverstein@AmazeHealth.com. Your current insurance broker or employee benefit consultant is not likely to steer you in the right direction. Ninety-plus percent of them have fallen victim to earning too much money while doing too little work. It’s time for you to rethink everything.

Who are the most expensive people on your health plan—employees or their family members? If you can’t answer that question, you may be overlooking a major blind spot.

No employer wants to see an employee’s child hospitalized, but it happens. And when it does, the six-figure bill hits your plan just the same, whether it’s the employee or their dependent. Once they exceed their out-of-pocket maximum, the cost is yours.

Dependents often account for a disproportionate share of catastrophic claims. While exact percentages vary by dataset, stop-loss carriers consistently report that 40–60% of their highest-cost claimants are dependents. Sun Life’s analysis of 60,000 stop-loss claims found that newborn and infant care, along with congenital anomalies, are among the top drivers of million-dollar claims. In fact, neonatal and congenital conditions frequently rank among the top 10 highest-cost categories, with individual cases reaching as high as $8 million.

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Cancer and chronic conditions among spouses also rank high. Reports from UnitedHealthcare and QBE, another major stop-loss carrier, show that neoplasms (cancers) and circulatory diseases are leading causes of excess-loss claims. These conditions affect both employees and spouses, but spouses tend to skew older, making them more likely to generate high-cost cancer or cardiac claims.

Yet employers invest almost nothing in promoting care for family members. While insurance brokers and benefits consultants have sold employers on gimmicks like biometric screenings, health fairs, and step challenges, I’d wager fewer than one in a hundred companies pay meaningful attention to family health. And yet, the data tells us that’s where half the cost lies.

How self-funded plans really work for families

By law, employers must cover at least 50% of the employee’s health insurance premium. They’re not required to contribute toward spouses’ or dependents’ premiums , so employees often pay the full family premium themselves. Employers have little incentive to cover family premiums, and by not doing so, they implicitly encourage spouses to use their own employer’s plan. That’s not irrational. Covering family members, regardless of who pays the premium, effectively doubles an employer’s claims exposure.

The grand illusion

When I speak to employers, I encounter a pervasive fallacy: because they don’t subsidize family premiums, they assume they’re not spending much on family members. However, premiums are unrelated to claims. Once someone is on the plan, the plan pays—dollar-for-dollar—the same whether it’s the employee, a spouse, or a child.

Meanwhile, most employer health strategies focus almost exclusively on employees. Wellness programs run through company email. Care navigation assumes people work in the building. Disease management operates during business hours. So, who’s managing the spouse’s diabetes? The child’s asthma? Prenatal care for a pregnant nineteen-year-old?

A lack of data, insight, and action

Most HR teams lack visibility into dependent health. Without insight, employers try to control costs without understanding what’s driving them. When a preventable condition spirals into a catastrophic claim, it feels like bad luck. It’s not. It’s bad information.

One unmanaged condition, especially among dependents, can destabilize your entire plan. Stop-loss premiums spike. Plan performance deteriorates. Wellness ROI evaporates. And yet, participation rates may look great, leaving everyone wondering why costs keep climbing.

By focusing only on employees, you’re leaving half your risk and much of your cost unchecked.

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Where to start

Managing healthcare as a business expense, not just an HR benefit, starts with asking questions that rarely get asked:

• Who are your high-cost claimants—employees or dependents?

• What conditions are driving your spend?

• Which family members are slipping through the cracks of your wellness and disease management programs?

Once you have the answers, you can act. Extend care navigation to spouses and children. Make sure families with chronic conditions know what resources exist. Use data to anticipate and prevent expensive claims rather than just reacting. That’s how insight translates into savings and better outcomes.

A dollar saved by helping a dependent get timely care is the same as a dollar saved anywhere else. A 14-year-old who winds up in the ER because of poorly managed sports-induced asthma is an avoidable ER visit just like the one that results from a 45-year-old’s unmanaged type II diabetes.

Self-funded plans give employers control over healthcare costs, but control depends on visibility. If you can’t see what’s driving spending, you’re not managing risk; you’re just reacting to it.

The next major claim on your plan probably isn’t coming from someone in your office. It’s likely coming from someone at home.

And that’s worth fixing.

The time has come to call a spade a spade. While the conduct of the healthcare industry infuriates me, nothing is more maddening than the inane political banter and journalistic commentary that fails to talk about the real issue.

The issue is not corrupt insurance carriers, though they are truly corrupt. It’s not greedy, administratively bloated hospital systems, though they are undeniably greedy and bloated. Nor is it the dominance of “non-profits” that do in fact operate like for-profit enterprises.

The real problem is obvious, though we pretend it isn’t. The U.S. government cannot fix the problems that plague the American healthcare system.

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The scale of the challenge

The American healthcare system is a $5 trillion economy unto itself, tightly entwined with a government that foots half the bill, at the expense of taxpayers. By most measures, U.S. healthcare is the third-largest economy on the planet, only behind the United States as a whole, and China. It’s bigger than the entire economies of Germany, Japan, and India. Think about that: we’re trying to engineer an economy that is larger than the economies of more than 95% of the countries on earth.

And yet, every election cycle, politicians promise to “fix healthcare” as if it were a pothole or a tax loophole. Journalists amplify these promises by asking politicians how they’ll do it. Yet they never ask the two most obvious questions:

1. Can it be done?

2. How can our government engineer a better healthcare system when it has never successfully engineered a better market for anything else?

The myth of legislative solutions

If we can successfully engineer a better healthcare system through legislation, can’t we also engineer better markets for automobiles, real estate, or food? Time and again, history proves we cannot. So why do we think healthcare is different? Does calling it “essential” give the government some unworldly power to fix it? Is it more important than food and shelter?

The Affordable Care Act (ACA) is a case study in this fallacy. While I believe the ACA was well-intentioned, it was so contrary to a market-based solution that it has led us to this most unstable place. It didn’t drive down costs, improve access, or enhance quality. What it did was add complexity, distort incentives, and accelerate consolidation—pushing a system that was already on the wrong path closer to collapse in the interest of political expediency.

The free market: History’s most powerful force

The free market is the most powerful force the world has ever known. It defeated Germany (twice), Japan, and the Soviet Union. It has lifted billions of people out of poverty and driven innovation at a pace no government could ever match. And yet politicians, and the people who elect them, seem to think that through sheer force of will, law, and executive action, they can fix the system.

It’s absurd.

Markets work because they harness decentralized decision-making. They reward efficiency and punish waste. They allocate resources based on value, not political influence. Government, by contrast, operates through central planning—a model that has failed everywhere it’s been tried.

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The coming collapse

There is only one option, as distasteful as it may be: we must unleash the free market. Yes, it’s going to be messy; it’s going to take time; and I believe we are going to experience ten to twenty years of chaos, misery, and in many cases, lives cut short by a system that should have protected them.

However, it will be worse if we refuse to begin.

On its current trajectory, the system will all but collapse within 36 months. Costs are rising far faster than Gross Domestic Product (GDP). Employers are buckling under the weight of premiums. Government programs are consuming an ever-larger share of tax revenue. Hospitals are consolidating into regional monopolies. Insurers are gaming risk pools. And patients are drowning in debt. It is not sustainable.

When a system teeters on the edge, it doesn’t negotiate. It breaks, and when it does, the pain lands hardest on those who rely on it most. American healthcare is nearing that point of instability, and change is coming whether we like it or not.

Sacrifice and innovation

There have been many times in American history when we had to make great sacrifices. We fought World War II because not fighting would have been worse. We didn’t know what the cost would be, but we knew we had to fight. This is that kind of moment.

While I wholly object to pure destruction without a plan, the reality is that we cannot simply decree a better system. That’s not how markets work. We need innovation and experimentation, entrepreneurs willing to challenge entrenched incumbents, and employers willing to rethink benefits.

We also need Americans—a.k.a. consumers, who are empowered with knowledge, transparency, and choice.

This will not happen overnight. It will require courage, capital, and compassion. Fortunately, markets, when unleashed, have a way of transforming even the most entrenched systems, often with remarkable speed.

Yet there will be consequences. Just as I cannot imagine a single mother saying, in 1870, that “I’m so glad we fought that war. It cost me my husband and two of my three sons, but it was worth it.” Not one. Yet more than 150 years later, through only the eyes of history, we romantically talk about the sacrifices that held the union together and freed the slaves.

The same will be true here. No one alive today will say, ‘I’m glad we let our healthcare system implode.’ The path ahead will be turbulent and painful. But in time, history may show this as the turning point—the moment we finally reclaimed control and reshaped healthcare for the better.

What must happen now

We must stop waiting for Washington to fix it. There is no legislative miracle coming. Real change will come from the ground up with employers, innovators, consumers, and investors who refuse to accept the status quo.

• Employers must stop buying blind. Demand line-of-sight into every dollar spent and steer members to care that delivers outcomes, not markups. Make managing healthcare as important as any other cost.

• Innovators must build business models that reward better care, not more care — and be willing to compete on cost and results. Innovators innovate because markets provide opportunities and for no other reason.

• Consumers must insist on knowing the truth: what care costs, what it delivers, and take ownership of their health decisions. Make the decision now to educate yourself and your family. Teach your children.

• Investors must stop pouring money into consolidation and start backing those willing to tear down what’s not working. If ever there was a need for ethical investing, this is it!

The hard truth

Doctors are taught that their job is to relieve pain. Yet the hard truth is that fixing healthcare in America is going to hurt. It will threaten power and profit, and it won’t happen neatly. Yet doing nothing will be far worse. Millions depend on a system that’s failing them every day. Every delay, every excuse, every false promise keeps people trapped in a system that can’t deliver care, protect dignity, or sustain life—and too often, it bankrupts them for trying.

It’s time to stop waiting for a rescue. The free market is the only force strong enough to fix American healthcare, and the only one we haven’t truly tried.

Employers are starting to ask uncomfortable questions. Who does my broker work for? Why do my costs keep rising while my coverage keeps shrinking? And in a world where I can buy a car, a house, or a plane ticket directly, why do I still need a middleman to buy healthcare?

These questions are long overdue. History shows that middlemen don’t last forever. When a bridge that once connected buyer and seller becomes unnecessary, it can quickly turn into an obstacle.

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When the bridge becomes the barrier

Middlemen didn’t begin as villains. They solved real problems for markets that were fragmented, opaque, or impossible to navigate.

A century ago, Ford couldn’t sell cars in California without a local dealer. The dealer was a vital connection, linking a manufacturer hundreds of miles away to customers who otherwise had no way to reach them. Today, Tesla sells directly to consumers online. Yet in some states, laws still prohibit direct-to-consumer auto sales—a legacy preserved by lobbying and regulation.

Insurance followed the same path. In the early 20^th century, someone in Omaha buying life insurance from a company in Connecticut needed a local agent. That agent was the bridge. Today, consumers can compare and purchase insurance online in minutes. The need for a local intermediary has vanished.

Travel agents gave way to Expedia. Stockbrokers yielded to E-TRADE and other popular direct trading platforms. Taxi dispatchers were replaced by Uber. Each relied on exclusive access to information until technology made that information public.

This story continues to play out across major industries. As transparency rises, the middleman’s grip weakens. That begs the question: are employee benefits brokers next?

The employee benefits conflict nobody wants to discuss out loud

At first glance, a benefits consultant seems to help employers select and manage health plans. That sounds straightforward enough. But scratch the surface, and you’ll find incentives that don’t always line up with the employer’s best interest.

Most brokers are paid by insurance carriers, not by the employers they claim to serve. Their income grows with the size of the premium, creating a powerful conflict: when higher costs bring bigger commissions, efficiency isn’t rewarded, and no one has reason to fight for it. If you’ve ever wondered why your broker seems calm while your renewal spikes 8% yet again, that’s the reason.

The Consolidated Appropriations Act of 2021 requires brokers to disclose all compensation—commissions, bonuses, overrides, carrier payments. In practice, though, most employers I speak with don’t even know if they’ve received these disclosures. And why would a broker volunteer the information if they’re not pressed?

It’s not that brokers are bad people. It’s that the system is built around incentives that reward the wrong outcomes. And when a system rewards the wrong thing, it simply produces more of it—year after year. Employers end up paying more for less.

An industry built to protect itself

No middleman gives up ground quietly. Car dealerships still lobby to block direct auto sales in many states. The health insurance world has its own version. There are rules, relationships, and incentives designed to preserve the old model. Over time, regulation, tradition, and money have built a fortress that protects the system, not the customer.

But fortresses don’t last forever. Protectionism only delays disruption. It never prevents it.

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What comes next

Employers have more leverage than they realize. Technology is stripping away the layers brokers have long relied on, exposing inefficiencies that were previously hidden and giving employers tools they never had before. Today, they can:

• Analyze their own claims.

• Negotiate directly with providers.

• Build networks and benefits tailored to your workforce, not your carrier’s priorities.

That doesn’t mean every broker is obsolete. The ones who endure will be those who prove their value through expertise, not through controlling access to information. The rest will go the way of the travel agent.

The questions you need to ask

Start with disclosure. Demand every commission, bonus, override, and carrier payment. The law requires it. If your broker won’t provide it, fire them.

Then consider: what expertise are you paying for that you couldn’t access directly? What would change if costs went down instead of up? How much of your plan is shaped by your needs—and how much by the incentives your broker can’t or won’t reveal?

There’s a future for advisors who choose transparency over commissions and align with employers rather than insurance carriers. The healthcare middleman era isn’t ending tomorrow. But its decline has already begun. Employers are noticing something that has always been true: the system wasn’t made to serve them, and the choice of whether to accept it may soon be theirs.

Your health plan may look solid on paper.

Hundreds of doctors. Major hospitals. Dozens of specialties.

But how many of those “in-network” providers can your employees realistically see?

For many employers, the answer is fewer than they think. In today’s healthcare market, insurers often design narrow networks that promise lower costs — and hospitals, eager to maintain patient volume, agree to restrictive terms. The result can be an illusion of access: networks that look broad on paper but, in reality, leave employees with limited options and long wait times.

The illusion of coverage

Imagine a hospital system in Denver claiming to offer cardiology and neurology services in Longmont or Fort Collins. Those clinics appear in directories, and the insurer marks the network as “adequate.”

But here’s the catch: those “local” specialists may only visit once a month, or not at all.

That’s enough for the insurer to declare geographic coverage and for the hospital to secure inclusion in a narrow-network contract. Both sides benefit: insurers get discounted rates and hospitals gain patient flow.

Employers and employees, however, lose. Workers may wait weeks for care, travel farther than necessary, and see the promise of their plan fall short.

Anti-competitive and potentially fraudulent

This practice borders on monopolistic behavior. It’s sleazy and it may also be legally questionable.

For example, in my home state of Colorado, the state’s regulatory framework relies heavily on qualitative standards for network adequacy, things like geographic distribution and appointment wait times. But enforcement is reactive, triggered by consumer complaints rather than proactive audits.

The Colorado Division of Insurance has begun collecting baseline data on provider networks, but without quantitative standards like minimum provider-to-enrollee ratios or drive-time limits, there’s little to prevent systems from gaming the system. The lack of transparency makes it difficult for employers to verify whether listed providers are truly accessible.

Why it matters to employers

When employees can’t access care easily, they delay treatment. Delayed treatment leads to higher costs, sicker workers, and lower productivity.

Worse, you’re locked in. Even when nearby providers have open schedules or better outcomes, exclusive contracts prevent you from adding them to your network. You’re stuck with what you negotiated. You’ve traded flexibility for a discount, and your employees pay the price.

The illusion of network adequacy isn’t just an insurance problem or a hospital problem—it’s a threat to your bottom line and your people. You’re the one footing the bill and facing retention hits when employees can’t get care. But here’s the good news: you also have the power to demand better.

What employers can do 

1. Audit your network (this month)
   Don’t trust provider directories. Verify that listed doctors are actively seeing patients in the claimed locations. Ask your Third-Party Administrator (TPA) or carrier for appointment availability and utilization data.

2. Demand transparency (at your next renewal)
   Require cost and quality reporting from your insurer. Many states have rules or laws such as Colorado’s HB25-1174 which mandates that carriers provide this information upon request, even for small group plans. 

3. Avoid exclusivity traps (before you sign)
   Be cautious with contracts that restrict your ability to work with other providers. They may save you pennies today but cost you dollars tomorrow in limited access and inflated claims.

4. Educate your employees (this quarter)

   Help them understand where to seek care and how to verify in-network providers. Misrepresentation can lead to surprise bills, delayed care, and frustration. 

5. Report bad behavior (when you spot it)

   If you suspect a hospital system is misrepresenting its network, file a complaint with your state Department of Insurance. In cases of fraud, legal action under the False Claims Act may be warranted.

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The bottom line

Network adequacy is more than a compliance metric; it’s a measure of how well you’re taking care of your people.

Employers must move beyond surface-level assurances and take an active role in verifying the integrity of their health plans.

In a system where hospital networks and insurers often prioritize market share over patient access, vigilance is essential. Don’t assume your plan’s reach equals real access. The fine print on your provider list may be costing you far more than you think.

Your employees trust you to choose a plan that works. Make sure it actually does.

If you’re waiting for someone to take responsibility for America’s healthcare system, don’t hold your breath. Everyone’s running for the exits.

Just last week, Colorado’s Insurance Commissioner advised residents to seek coverage through their employers because marketplace plans have simply become too expensive. The message was clear: your boss is now your best hope for affordable care.

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Nobody wants to own the problem

For the last decade, under the Affordable Care Act, American healthcare operated on the premise that if you had a job, your employer covered you. If you didn’t, government programs or the individual marketplace stepped in. The system was expensive and complicated, but at least it worked, sort of.

Not anymore.

Just a few months ago, Congress was exploring ways to expand the use of Individual Coverage Health Reimbursement Arrangements (ICHRAs), which allow employers to give workers money to buy their own insurance on the exchanges instead of providing coverage directly. It’s billed as a model that promotes choice and flexibility, but what it really signals is a retreat from traditional employer-sponsored coverage.

So, now we have a paradox: government officials are telling people to get employer coverage. Employers are trying to push people onto government exchanges. The two primary ways Americans obtain healthcare are telling them to look elsewhere, at the same time.

There’s nowhere to go

Let’s start with middle-class families that have decent jobs. Right now, most of these families have employer coverage. But if their employers adopt ICHRAs and send them to the marketplace, they’re in trouble. They likely earn too much to qualify for subsidies (and subsidies are a big part of what the current government shutdown fight is about) that would make coverage affordable. Instead, they’d be paying full price for plans that cost more and deliver less than what they have now.

Families who do qualify for subsidies face a different problem. The premium help gets them in the door, but these plans come with very high deductibles and out-of-pocket costs they can’t afford. They have coverage they can’t actually use. As costs spiral upward, the marketplace gets more unstable each year. Plans change. Networks shrink. And premiums keep climbing even with government help. And costs are going to keep climbing as more people drop out of the health insurance market, regardless of who’s paying for it, because they can’t afford their own share either way.

Workers between jobs, self-employed, or part-time get hit hardest. They have no employer coverage to fall back on. No defined contribution to help. They don’t qualify for subsidies. They’re shouldering the entire burden—full premiums, full deductibles, full out-of-pocket costs on a system that was never built to serve them directly.

If you’re managing a self-funded plan, you’re watching all of this while trapped yourself. Your costs are climbing past sustainable levels. The government says employer coverage is the answer, which means you’re supposed to be the answer. But your employees can’t afford the marketplace if you send them there. And you can’t absorb these increases much longer either. You’re being told to solve a problem that has no solution at these prices.

This is an affordability crisis hitting everyone at once. Nobody has a way out.

When both sides let go at once

Employer coverage has been eroding for years. Government programs have always had gaps. But we’ve never watched both major coverage sources try to redirect people elsewhere at the same time.

When your state’s insurance commissioner says to get employer coverage while employers explore ICHRAs to send workers to the marketplace, it isn’t a policy disagreement. This is a system out of options. Neither the government nor the private sector wants to own the problem. Both are looking for ways to offload responsibility. Both are failing to create a sustainable path forward.

The hand-off only works if someone is willing to catch the ball. What we’re watching now is both sides dropping the same pass.

This can’t end well.

We can keep treating coverage as a game of hot potato, or we can confront the structural contradictions that got us here. Until we do, costs will keep rising, access will keep declining, and frustration will keep growing. The solution isn’t pushing people back and forth between two broken options. We need to build a system that works no matter which direction you’re coming from.

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In the workplace, health decisions are not made in isolation. The concept of herd immunity suggests that when most people are vaccinated, the risk of disease spreading drops dramatically. But what happens when vaccination rates fall? That’s where the Vaccine Paradox comes into play: the fewer people around you who are vaccinated, the more critical it becomes for you — and your employees — to be vaccinated.

The employer’s risk landscape

For employers, the stakes are high. In environments like factories, restaurants, offices, and schools, people work in close proximity. When viruses spread, they spread fast — and the consequences can be severe:

• Increased absenteeism disrupts operations.

• Short staffing can force temporary closures.

• Lost productivity and morale can ripple across teams.

• Higher healthcare costs may follow outbreaks.

In schools, the impact is just as serious. When students miss class due to illness, teachers struggle to maintain continuity. When teachers themselves get sick, districts must spend on substitutes, and educational outcomes suffer.

The paradox in action

When vaccination rates are high:

• The virus struggles to spread.

• Individual risk is low.

• Business continuity is protected.

When vaccination rates are low:

• The virus spreads easily.

• Individual risk rises.

• Businesses face operational and financial strain.

This is the Vaccine Paradox: the more others opt out of vaccination, the more essential it becomes for each individual to opt in.

Strategic implications for employers

Vaccination is no longer just a public health issue, it’s a business continuity strategy. Employers who encourage vaccination are not only protecting their workforce, but also safeguarding their operations, reputation, and bottom line.

Key steps employers can take:

• Educate employees on personal and workplace risks.

• Facilitate access to vaccines through on-site clinics or partnerships.

• Support time off for vaccination and recovery.

• Communicate clearly about the business impact of outbreaks.

A call to action

In a world where vaccine hesitancy persists, employers must lead with clarity and urgency. The Vaccine Paradox reminds us that individual health decisions have collective consequences and that in the absence of herd immunity, individual protection becomes paramount.

The American healthcare system is collapsing—and fast. In five years, it may be unrecognizable. I foresee two decades of chaos. People will die from lack of access to care. Families will be shattered. Large employers will dominate even more, leveraging economic advantages to build systems far beyond today’s self-insurance models while smaller companies will simply get out of the business of healthcare altogether.

The concept of pre-existing conditions will return, albeit through different systems that skirt the ACA. Government won’t stand in the way, because it has no answers to the problem.

Serious medical conditions will make people unemployable. Chronic illnesses will limit job options and force people to accept lower wages for coverage. Cash-pay systems will surge. Americans will need to become more self-reliant.

No one wants to talk about this—it’s too ugly, and there are no clear solutions. But ignoring it won’t help. Our tendency to wait for collapse before acting is deeply ingrained. We suffer from normalcy bias, avoiding hard decisions because the costs are immediate and the benefits distant. We don’t fix what’s broken—we wait until it’s shattered.

While I make predictions, I know they’re wrong. But they help us think and prepare. An economist I follow tells the story of a WWII weather officer whose team was tasked with long-term forecasts. The team was never able to do any better than simple flips of a coin. When the team asked to be relieved of its useless duties, they received this reply: “The commanding general knows the forecasts are no good. But he needs them for planning purposes.”

I share long-term forecasts for the same reason—to help you prepare for an uncertain future.

How America’s healthcare system became so broken

The evolution of today’s broken healthcare system began in earnest after World War II, but its malignancy took root in 1965—the year Medicare became law. While I was born that year, I don’t think my birth was the cause; it’s mere coincidence. Still, the timing is symbolic. Medicare was a well-intentioned response to a growing crisis, but it also marked the beginning of a long, slow unraveling of the economic foundation of health insurance.

Insurance is about risk. There is no health insurance industry in the United States because the system is not based on risk.

The seeds of Medicare

Medicare was created to solve a very real problem: seniors were living longer, but they couldn’t afford the medical care that came with aging. Several forces converged to make this urgent:

• Medical science was advancing, offering new ways to extend life—but at a cost.

• The post-war economy had become mobile, scattering families and leaving elderly parents without informal care.

• Social Security provided income, but not healthcare, and private insurers refused to cover older adults, citing the greater risk.

• Politicians responded to pressure from a growing, aging voter base.

Medicare was not designed as traditional insurance. It was—and still is—a government-run payment system, more akin to Social Security than to private health coverage. It reimburses providers for services, regardless of individual risk. At the time, this seemed manageable. People didn’t live much beyond 65, and medicine was relatively inexpensive. But that didn’t last.

Employer-sponsored insurance: A wartime workaround

Meanwhile, the private insurance model was taking shape in a very different way. During WWII, the U.S. government froze wages to control inflation. Employers, desperate to attract workers, began offering health insurance as a fringe benefit—something not counted as wages and exempt from income tax. This workaround became the foundation of the employer-sponsored insurance system we still rely on today.

Initially, these plans covered basic hospitalization and surgical services. Over time, they expanded to include physician visits, major medical coverage, and eventually dental and vision care. But the system was never designed for portability, equity, or long-term sustainability. It was a patchwork solution to a wartime problem that calcified into national policy.

The ACA and the collapse of risk-based insurance

Risk-based employer health plans began to unravel with the passage of HIPAA in 1996. While most associate HIPAA with privacy, its more significant impact was on accessibility and portability. The law restricted how group plans could handle pre-existing conditions, marking the start of a major shift away from risk-based concepts.

Key provisions included:

· Shorter waiting periods: Plans could exclude coverage for pre-existing conditions for no more than 12 months.

· Credit for prior coverage: Previous insurance counted toward reducing or eliminating exclusion periods.

· Portability: Coverage could be maintained when changing jobs or employment status, if eligibility criteria were met.

HIPAA made it easier for individuals to obtain and keep coverage despite pre-existing conditions. In doing so, it began the separation of health insurance from individual health risk—undermining the foundation of risk-based employer plans.

The Affordable Care Act (ACA) was another response to crisis—this time, the crisis of millions of uninsured Americans and rampant discrimination against those with pre-existing conditions despite HIPAA. The ACA’s mandate that insurers cover everyone, regardless of health status, was a moral and political victory. But economically, it was the last straw that broke the back of the traditional insurance model.

Insurance depends on risk pooling: healthy people pay in, sick people draw out. When coverage is guaranteed and premiums can’t be adjusted for risk, healthy individuals have little incentive to buy insurance until they need it. The ACA tried to counter this with an individual mandate, but that was later eliminated by the Supreme Court. Now, many treat insurance like a fire extinguisher—something to pull out (buy) only when the flames are visible.

Why healthcare insurance isn’t really insurance anymore

One of the most fundamental problems with the U.S. healthcare system is that it no longer behaves like insurance. In traditional insurance markets—life, auto, homeowners—the concept of risk is central. You pay premiums not because you expect to “get your money’s worth,” but to protect against unlikely but potentially catastrophic events.

• With life insurance, we hope never to collect. I hope I stop paying premiums at some point—maybe 70, 80 or even 90 and live on, having never collected a penny.

• With homeowners insurance, a majority of homeowners go their entire life without ever filing a claim.

• With auto insurance, a single claim every few years is typical. Multiple claims can label you a high-risk driver, making coverage more expensive or even inaccessible.

These systems work because they rely on risk stratification and behavioral incentives. People are rewarded for being low-risk, and penalized for being high-risk. This keeps premiums affordable and encourages responsible behavior.

Healthcare insurance, however, has abandoned this model. Especially since the ACA mandated coverage for pre-existing conditions, there is no meaningful risk assessment in the system. People can wait until they’re sick to buy coverage, knowing they cannot be denied. This creates a dynamic where insurance is no longer about protecting against future risk—it’s about paying for known costs.

In effect, healthcare insurance has become a cost-sharing mechanism, not a risk-based product. People calculate whether they’ll “get back more than they pay in,” and if they’re young and healthy, they often opt out entirely. There’s little incentive to maintain continuous coverage, and no penalty for waiting until care is needed. Even if you have to wait until the next ACA open enrollment period, you are never more than 365 days away from being able to purchase a good policy. In extreme cases, you can quit your job and qualify right away, only to seek a new job a week later. If you are suddenly to incur hundreds of thousands of dollars in cancer treatments, quitting your $80,000 per year job isn’t such a bad idea if it means you can now purchased subsidized coverage through the marketplace. Better yet—get yourself fired and collect unemployment insurance, too.

These realities have broken the economic logic of insurance. Without a balanced risk pool—where healthy individuals subsidize the sick—the system becomes unstable. Costs rise, premiums spike, and insurers either exit the market or restrict coverage in other ways.

Death spiral: The risk pool worsens each year

As medical costs rise, so do premiums for fully insured plans and expenses for self-insured employers. In response, younger, healthier, and lower-wage employees increasingly opt out—many simply can't afford their share, even with employer contributions. Some drop out for financial reasons; others understand they can buy in later when they need care.

As low-cost individuals exit, the average risk—and cost—of those remaining increases. Despite employers’ efforts to control expenses, costs continue to rise at twice the rate of inflation. The issue isn’t poor cost control—it’s the growing concentration of high-risk individuals.

We’re nearing a tipping point. Carriers that once required 70% employee participation have dropped thresholds to 50% or even lower, reflecting the accelerating collapse of the traditional risk pool.

As costs rise, the risk concentration increases. It’s an unsustainable trend.

The ripple effects of a riskless system

The absence of risk-based incentives in healthcare insurance doesn’t just distort consumer behavior—it reverberates throughout the entire system.

1. Innovation gets skewed toward profit, not prevention
   In a system where insurance is expected to cover everything, innovation tends to focus on billable interventions rather than preventive solutions. Pharmaceutical companies and device manufacturers prioritize treatments that can command high reimbursement rates. Preventive care, lifestyle medicine, and long-term health investments—while often more cost-effective—struggle to gain traction because they don’t fit neatly into the fee-for-service model.

2. Providers are incentivized to maximize billing

   Hospitals and physicians operate in a system where revenue is tied to volume and complexity of services. Without meaningful cost-sharing or risk-based pricing, there’s little incentive to limit unnecessary procedures or optimize efficiency. The result is a system that rewards doing more, not doing better.

3. Insurance markets lose their economic logic

   Traditional insurance markets rely on underwriting—assessing risk and pricing accordingly. In healthcare, that logic has been legislated out. Insurers can’t charge more for higher-risk individuals, nor can they deny coverage. This forces them to rely on broad subsidies, government support, or aggressive cost controls to remain solvent. It also drives consolidation, as smaller insurers struggle to compete without the ability to manage risk.

4. Consumers become passive participants

   When insurance is expected to cover everything, consumers disengage from cost awareness. There’s little incentive to shop for value, ask questions, or consider alternatives. This erodes market discipline and drives prices higher across the board.

A system designed to fail gracefully, not succeed efficiently

The current healthcare system is built to absorb crisis, not prevent it. It’s reactive, not proactive. It’s designed to pay for illness, not invest in health. And because it lacks the core mechanics of insurance—risk, incentive, and accountability—it continues to spiral toward unsustainability.

Why cost control is mostly a myth

While some costs are theoretically controllable, the reality is far more complex. Here’s why:

1. Employee turnover undermines long-term investment
   The median employee tenure in the U.S. is about six years. Investing in employee health is a long-term proposition, but many employees won’t be around long enough for those investments to pay off. Older, higher-earning employees may stay longer, but they also tend to be more expensive to insure.

2. Prevention isn’t always cost-saving
   Preventive care is ethically and clinically important, but it’s not always economically efficient. Early detection of a disease like cancer may reduce initial treatment costs, but it can also lead to years of ongoing care. The economics are murky, even if the clinical benefits are clear.

3. Better benefits attract higher-risk employees
   Generous health plans tend to attract employees with greater medical needs. This is especially true in competitive labor markets, where workers with chronic conditions seek out employers with robust coverage.

4. Better benefits also retain higher-risk employees
   Once enrolled, employees with significant health issues are less likely to leave, knowing they may not find comparable coverage elsewhere. This creates a retention bias that increases long-term costs.

5. Private employers pay far more than government programs
   The private sector pays 3–4 times what Medicare and Medicaid pay for the same services. This cost-shifting inflates prices in the employer-sponsored market, driving healthcare inflation at double the rate of general inflation.

6. Adverse selection within the workforce
   As premiums rise, healthier employees opt out of coverage, leaving a sicker, more expensive pool behind. This self-selection accelerates cost increases and undermines the risk pool.

The illusion of control

The belief that employers can meaningfully control healthcare costs by adjusting plan design or negotiating better rates is largely an illusion. In self-insured arrangements, insurance carriers profit handsomely—not because they bear risk, but because the employer does. Carriers merely administer the plan and collect fees, while the financial burden of claims falls squarely on the employer.

Each year, costs are shuffled to create the appearance of savings, but the underlying system continues to erode. Worse still, in the self-insured market, rising healthcare prices actually benefit carriers. Their incentives to reduce costs exist only in fully insured products, where they bear the risk. This creates a deep conflict of interest—one that won’t be resolved until self-insured plans disappear. Yet even then, the challenge of covering pre-existing conditions remains unresolved.

Many smaller employers have already opted out of traditional healthcare altogether. Others are turning to ICHRAs, giving employees money to purchase their own coverage. As this trend accelerates, fully insured plans may see a resurgence. But their long-term viability is questionable, as they’re required to cover the most expensive pre-existing conditions without adequate compensation for the risk.

Change is coming quickly. It was already underway. Now, with a government poised to accelerate the shift, the transformation of employer-sponsored healthcare is inevitable—and imminent.

While this article is already long enough, I will not get into solutions here. I will leave that for future articles. That said, there is one simple thing we can do to get started: STOP USING THE WORD INSURANCE when it comes to healthcare. We do not have a health or medical insurance system. We have a payment system. That would be a good, simple place to begin.

Get ready for a wild ride!

Google the words "patient" and "steering" together and you'll get a nearly endless stream of results. No surprise there; the healthcare industry calls it "steerage" as if patients were cattle being herded down a chute or were third class passengers on a cruise ship in the 1920s.

I hate that term. We don't want others to “steer” us to buy groceries or choose a restaurant. So, while we might ask a friend for recommendations, our freedom of choice is something we cherish as Americans. Steering is yet another obnoxious healthcare term that reveals how the industry thinks about patients. The system is upside down. It’s time to flip it and put patients back on top.

"Steering" implies taking away choices and personal empowerment. It's both condescending and revealing.

But the practice itself, whether we call it steering or something else, has become one of healthcare's most insidious practices and one of its most profitable strategies. Both patients and the employers who help pay for their healthcare are suffering the consequences.

Several years ago, I had a minor issue that my doctor and I thought should be looked at by a neurologist. She made the referral; I made the appointment. When I saw my doctor a year later for my routine physical, I asked, “Why did you refer me to that neurologist?” Her simple and blunt answer: “Oh, because she is the only neurologist in the group.” Then, a brief pause—I’m sure she was noticing the displeasure on my face. She then asked, “Why, was she not good? I was afraid of that.”

That’s it. Keep it within the practice group, keep it in the network, keep it in the system. None of those criteria involve “what’s best for my patient.”

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So, who's really controlling patients' healthcare decisions? And more importantly, are they directing patients to what’s right for them or toward what’s best for payers and providers.

When most people hear about this practice, they imagine it's about guiding patients toward lower-cost care. That's the story the industry wants them to believe. Insurance carriers say they're guiding patients to more "cost-effective" imaging centers. Hospital networks say they're keeping patients "in the system" for better "care coordination." Everyone claims to have patients' best interests at heart.

But do they? In any other industry, we’d be skeptical of such claims. Marketing is about influencing customer decisions. A car salesman wants customers to buy the most expensive car they can afford, plus that extended warranty. Nobody believes car salesmen are guided by ethics. But, as long as the salesman is honest, we accept that they'll sell us whatever they can. “Buyer beware,” the saying goes. So we do our best to be aware.

But medicine shouldn't work this way. Healthcare shouldn't be about selling patients something; it should be about helping them achieve and maintain their health. These are fundamentally different goals.

Follow the money and you'll find the truth

Hospitals have been on a buying spree since the Affordable Care Act became law. They've purchased primary care practices at an unprecedented rate, turning independent doctors into hospital employees. As health systems continue this consolidation and the line between insurance carrier, provider network, and health system becomes increasingly blurred, we're seeing a healthcare system where nobody is looking out for patients or the employers funding their care.

Here's what that looks like in practice. Doctors routinely send patients for MRIs that cost $1,600 at their hospital. The same scan would cost $600 at an independent imaging center down the street. Physicians refer patients to specialists in their hospital network who charge triple what an independent doctor charges.

When hospitals own the doctor's practice and compensation is tied to referrals and system revenue, decisions get clouded by business imperatives, instead of prioritizing patient care. While the doctors I know all want to do the right thing, the pressures, they say, are immense. Such pressures are among the leading causes of physician burnout.

What's it worth when a health system buys a primary care practice? An extra $350 per patient per year in medical costs, according to a study published in JAMA Health Forum. When primary care physicians became "aligned" with health systems, specialist visits jumped 22.6% per patient. When patients need care, they get funneled to services within that same health system at much higher rates: 29% more specialist visits, 14% more emergency room visits, and 22% more hospitalizations stay in-house1.

The study found no improvement in patient outcomes, just higher bills. The same research group found in another study that vertical integration leads to price increases of 12% for primary care and 6% for specialists2.

Such steerage and referrals are made every day, and most patients have no idea of what they are experiencing. It’s hard to understand the system, even for those working inside it. Most patients are just along for the ride.

The battlefield nobody's talking about

All of this is part of a larger cost battlefield that isn't getting enough attention. Government would have us characterize it as waste, fraud, and abuse; and there's certainly plenty of that going on. But true manipulation, in a marketing and sales kind of way, is more subtle.

Consider a patient who needs a hysterectomy. The doctor wants to schedule it at their hospital, while the insurance company imposes strict "medical necessity" guidelines through preauthorization, while a patient navigation service might try to help the patient find a lower cost place to have the hysterectomy done in the first place.

Yet what are all these parties battling over? The answer is money. The health system wants to make more, the insurance company wants to pay out less, and the navigation service is generally beholden to someone, but not the patient. The navigation service might be embedded in the insurance carrier, or the third-party administrator that processes claims on behalf of the employer who pays for the insurance, but they are not the patient’s true, trusted partners.

Patients get caught in this tug-of-war, stuck wondering who’s truly on their side. Each party blames the others – the payer (insurance carrier), provider (the doctor or hospital) and the navigation service. While they’re busy pointing fingers at each other, who’s putting the patient first?

The solution is independent medical partners

It's time to look at the American healthcare system through a different lens. We need independent medical partners.

For many healthcare services, this means embracing fee-for-service medicine. When I was a child, some doctors still made house calls. They got paid a simple fee for stopping by the house. Fee-for-service is often blamed for all that is wrong with healthcare. But that criticism is wrong when applied to simple, mostly transactional interactions with local medical providers and services.

Think of it like local plumbers, electricians, and HVAC repair services. For most home repairs, you want the job done well at a fair price, and you don't need a relationship with the contractor. Healthcare is similar, in a sense. An MRI is a transaction; a lab test is a transaction. Patients don't care where they have these done. They don't need to get to know the technician. They just need the service performed to high quality standards, efficiently, and at a fair price.

When your water heater breaks, you want a plumber who charges a fair price for good work. Anyone who's paid for plumbing, HVAC or electrical services on a so-called "value-based" model (i.e., pay a subscription fee each year) generally comes to regret it. The service level tends to wane after a couple of years, and the contract generally only affords a discount on repairs. Once consumers are beholden to the contractor, they wonder if they're really getting a good price on repairs, or if they're just marking it up to offset the discount.

Fee-based repairs are the only system that works for your home. Why should local medical services be any different? Aren’t we generally talking about repairs to our bodies?

When patients need a partner

Of course, not all healthcare is transactional. Until patients reach that later stage of life that most of us dread, they don't really want or need relationships with local medical systems. That's not to say that relationships are never valuable, but sometimes a short-term relationship will do. For example, if someone has a recurring problem with their knee, it might be beneficial to have a local orthopedist they like and learn to trust. But that orthopedist isn't going to do breast exams or treat their teenagers' acne. The fact that they work for the same health system doesn't add meaningful value for the patient.

What patients would probably like is a steady relationship with a primary care doctor. But that's becoming increasingly difficult. Nearly four of five physicians are now employees of hospitals and corporate entities, with corporate ownership nearly doubling in recent years.3 These doctors, much as they try to put patients first, are under increasing pressure to refer patients to specialists in their system.

Over the past decade, the demise of primary care has accelerated. The ratio of primary care physicians to specialists is now completely inverted, from two-thirds primary care to one-third specialists, to the opposite4. The percentage of doctors practicing primary care now stands at about 25%, less than half what this country needs. Many things primary care doctors used to do, like a full-body skin exam or a breast exam, now consist of recommendations to "see the dermatologist" or "see your OB/GYN” once a year." While those may be good recommendations for some, for many it’s just adding costs and time.

This is the problem with consolidation. It dismantles the very relationships patients need most.

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Independent virtual care works best

In a perfect healthcare world, we would all have a primary care doctor we could trust to be there for us in those moments when we needed their care the most. Unfortunately, that world is quickly disappearing. It’s estimated that more than 100 million Americans do not have a primary care provider. And for those that do, the average wait for an appointment is 28 days. That doesn’t do you much good if you are suffering from a massive migraine of if your child develops a fever outside of business hours.

This is why I believe independent virtual care offers the best solution. To succeed, it must be completely independent of local medical systems and insurance companies. It offers 24/7 care from trusted providers to patients and their loved ones.

These advocates can be patients' partners, teachers, coaches, and guides because their paycheck doesn't depend on either maximizing revenue from procedures or minimizing insurance payouts. Independence is key, because it means avoiding all the conflicted incentives that are driving up costs for both patients and employers.

Over the next few years, I think we’re going to hear screams for doctors to once again become more independent, as a law in Oregon passed on May 28th seeks to do. While the Oregon law goes too far and sort of misses the point, the system of severely misaligned incentives is what’s driving such sentiment.

I don’t believe for a second that doctors are the problem. I don’t know doctors who don’t want to do what’s right for their patients. Unfortunately, these days there’s often someone else pulling their strings—and controlling their paychecks.

The simple reality is that if patients don't have someone they can trust, and who is independent and aligned with their best interests, someone else certainly will direct them toward what's best for their own bottom line.

And patients, employers, and taxpayers are going to be left with the tab.

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There are many commendable nonprofit organizations in the United States, but far too many misuse their “nonprofit” designation. Large hospital systems often top that list, benefiting from a status they don’t deserve, and one that may in fact be harmful.

Profit in a nonprofit world

Many of America’s nonprofit hospitals operate with stunning profitability. Some report profit margins exceeding 20%, while most for-profit businesses would envy such returns. As a group, nonprofit hospitals collectively earn tens of billions of dollars a year on investment portfolios alone. Their excuse for not paying taxes? That taxes would erode their ability to serve their communities. That’s circular logic at best and a bold-faced lie at worst.

Where the money goes

Roughly 3,900 U.S. hospitals carry the nonprofit label, yet many rake in substantial profits. If they were genuinely focused on community benefit, their profit margins would be far lower. It begs the question: where are those profits going? The answer often lies in bloated executive compensation, investment portfolios, and massive reserve funds—not patient care.

Meanwhile, hospitals in smaller towns often reap no profit and find nonprofit status burdensome. Their designation adds paperwork, compliance tasks, and legal assessments that rarely benefit the community.

Accountability vacuum

Local governments, when faced with surpluses, face voter pressure to reinvest or refund. Not so with nonprofit hospitals. Their boards operate independently. There are no shareholders. No elections. No real accountability.

Redefining the social contract

If communities are de facto shareholders in nonprofits, they deserve transparency, reinvestment, and price fairness. If hospitals fail to deliver, taxing their excessive profits becomes necessary.

A progressive tax scheme offers an elegant solution. For example:

• Less than 3% profit, no taxes

• 3% to 6%, pay the same corporate tax as a for-profit hospital

• 6% to 15%, pay a 50% tax

• Over 15%, pay a 90% tax.

This model would discourage excess hoarding and encourage reinvestment. Profitable companies pay dividends to shareholders. They don’t just sit on money forever. Why should nonprofit hospitals? And, the approach aligns with the core principle of nonprofit status which is to provide public value.

Final thought

Nonprofit hospitals don’t have to lose their profits to taxes. They can choose to reinvest in their communities, their patients, and the public good. That’s the real social bargain. Any for-profit business either figures out how to return value to shareholders by reinvesting in the business or paying dividends. Their cash hoards are not allowed to grow without bounds. Nonprofits should be no different. In fact, they should be held to a higher standard.

Employer medical costs are seeing the biggest increases in a decade, and they are going to rocket even higher. Many employers don’t know it yet, because they won’t see their renewals until September or October.

For the last several years, hospitals feasted on $135 billion of stimulus through a vast array of COVID-related programs. While seemingly beneficial, the phenomenon is similar to the results of easy-money student loans. While the loans seem great for students, the flow of money to universities over the past 20 years has created the greatest inflation in tuition in history. Today’s and tomorrow’s students are paying the price.

Education and healthcare are the two biggest markets where we seem to think we can ignore economics. We can’t. Easy money always leads to inflation, and we fight corrective deflation tooth-and-nail.

As the flow of money abates, lower prices are never in the cards. High costs with fewer customers means passing more on to each customer. But wait … there’s a constraint. The market doesn’t set Medicare and Medicaid prices. The government does. That means costs have to be piled onto the private sector, the only place hospitals and health systems can pass their costs to. Today’s and tomorrow’s employers (and their employees) are paying the price of healthcare inflation, and they’re paying it disproportionately. Defying economics comes at a cost.

Now, with the passage of the Big Beautiful Bill, hospitals are set to see their revenues decline. Medicaid will be impacted in particular, but Medicare prices will be constrained, too. Who is going to pay the price? The answer is American companies. Hospitals can’t easily pass on higher costs to government payers, but they can raise their prices for the private sector without limits. Brace yourselves…

Employers are facing a triple whammy.

1. The end of COVID stimulus

2. General inflation

3. The Big Beautiful Bill

Now, more than ever, employers need to embrace serious strategies to reign in costs.

For most employers, controlling medical costs is not their domain of expertise. So, they rely on employee benefit brokers and consultants to tell them how to do it. Unfortunately, that path is fraught with the peril of conflicted interests.

Of course there are some great brokers and benefit consultants out there, too. They’re just scarce. They are the ones that want to earn a good living while providing their clients with full transparency, and good, honest strategies to actually drive down costs. It is going to be a particularly challenging renewal cycle this year, so buckle up!

If you’d like some independent advice on your health plan design or broker/benefit-consultant selection, feel free to contact me confidentially at david.silverstein@brokenhealthcare.org. All inquiries that come via this address are kept in strict confidence.

When I first became personally and emotionally invested in fixing America’s healthcare system, I zeroed in on a core dysfunction: the three-party structure involving payers, providers, and patients. This setup, while seemingly balanced, often obscures accountability and undermines transparency.

To understand what makes an economy function effectively, I turned to economic research. The fundamentals are surprisingly simple. A healthy market requires:

1. A system of price discovery – so all parties can agree on a fair price.

2. A lack of monopolistic behavior – to ensure competition.

3. Ease of market entry and exit – to foster innovation and entrepreneurship.

Of these, I focused on price discovery. There are several mechanisms for it—negotiation, bidding, and transparency. In a three-party system, however, only one method ensures fairness: full transparency. When three parties are involved, and all must operate with the same information, that information must be openly accessible to all. Anything less invites imbalance.

I once told the President of the United States: “Price transparency won’t fix everything, but nothing can be fixed without it.”

That conversation helped lead to a presidential executive order, now known as the Transparency-in-Coverage rules.

But healthcare isn’t the only area where three-party systems obscure the truth. Consider how employers purchase medical insurance. Here, the three parties are the employer, the insurance agent, and the insurance carrier. In this triangle, the employer—like the patient in the healthcare model—is often left in the dark.

When transparency is lacking, collusion between any two parties can dominate the system. In healthcare, payers and providers employ entire teams to “enhance the revenue cycle” and maximize profits—while patients navigate the system alone. In the insurance market, it’s often carriers and agents who align their interests, leaving employers exposed.

In 2021, a new law took effect requiring transparency in these employer-agent-carrier relationships. Yet compliance remains low. Many agencies only provide the required disclosures if clients explicitly ask for them.

For self-insured employers, this is especially critical. Under ERISA, they are fiduciaries of their medical plans. That means they are legally responsible for managing those plans in the best interest of their employees. Without full transparency, they risk making poor decisions—and facing lawsuits.

Major corporations like JPMorgan Chase, Wells Fargo, and Johnson & Johnson have already been sued by employees for breaching their fiduciary duties related to healthcare plans.

The law is clear. Employers must demand transparency. If you’re a self-insured employer, you can use the template below to request the required disclosures. Without them, you’re just as vulnerable as your employees—trapped in a three-party system where opacity breeds exploitation.

Your Company Letterhead]
[Date]

[Consultant/Broker Name]
[Consulting Firm Name]
[Address]
[City, State, ZIP]

Subject: Request for Full Disclosure of Compensation in Accordance with the Consolidated Appropriations Act, 2021

Dear [Consultant/Broker Name],

As the fiduciary of our employee group health plan, and in accordance with Section 202 of the Consolidated Appropriations Act (CAA) of 2021, we are writing to formally request a comprehensive disclosure of all compensation you or your firm expect to receive in connection with the services provided to our plan.

Specifically, please provide the following information in writing, no later than [insert reasonable deadline, e.g., 10 days from the date of this letter]:

1. Description of Services: A detailed description of all services you will provide to our group health plan, including any services provided by affiliates or subcontractors.

2. Direct Compensation: A breakdown of all direct compensation you expect to receive from our plan, either in aggregate or by service. This includes flat fees, per capita charges, or percentage-based fees. Please include all services you procure directly for us, including insurance products, ancillary services, and administrative systems (e.g., enrollment platforms, compliance services). This includes all aspects of insurance, from network access to stoploss and wrap networks.

3. Please be sure to exclude nothing, regardless of any language that may appear in any contract. The law and disclosure requirements override any confidentiality clauses in contracts you might have with third-parties.

4. Indirect Compensation: A description of all indirect compensation expected from third parties (e.g., insurance carriers, vendors), including:

   • The payer of the compensation

   • The services triggering the compensation

   • The arrangement under which the compensation is paid

   • Any contingent or formula-based compensation (e.g., bonuses, overrides, persistency incentives)

5. Transaction-Based Compensation: Any commissions, finder’s fees, or similar incentives, including the payer and recipient of such compensation.

6. Termination Compensation: Any compensation expected in connection with the termination of our agreement, and how any prepaid amounts will be calculated and refunded.

7. Estimates and Methodologies: Where exact amounts are not known, please provide good faith estimates, including the methodology and assumptions used to calculate them.

Please note that failure to provide this disclosure may render our agreement non-compliant under ERISA and subject to penalties. If you have already prepared a disclosure document that meets these requirements, please forward it to us at your earliest convenience.

We appreciate your cooperation in helping us fulfill our fiduciary responsibilities and ensure compliance with federal law.

Sincerely,
[Your Name]
[Your Title]
[Company Name]
[Email Address]
[Phone Number]