This is the time of year employers, local governments, employees, and individuals are looking at their healthcare renewals and expect double digit insurance premium increases for 2027. This pours fuel onto the fire of a healthcare system in crisis.
Renewal notices often arrive at the last minute so CFOs and HR directors do not have adequate time to shop alternatives – a form of bait-and-switch. They are stuck with few choices, the fear of losing coverage, and fear of a ruinous medical financial emergency. Everyone is held hostage to higher premiums and ridiculous deductibles to meet before they have the privilege to even use insurance coverage.
There are better options than traditional insurance. Transparency in contracts and direct contracting bypasses the inflated costs and poor healthcare access caused by all of the middlemen. Demand better.
We do not have to wait on the government.
Direct Primary Care (DPC), for example, is far better medical care at a fraction of the cost. DPC combined with innovative options like health cost sharing plans are far better medical care, often for less than employee contributions alone. DPC and cost-sharing (i.e. CrowdHealth) is offered to my clinic staff for free without any “contributions.”
Changes with the OBBB last year allow HSAs to pay for DPC membership and combine with more plans, for individuals or businesses, and even governments. Imaginative solutions are available now. Traditional brokers are incentivized to steer consumers straight to the highest-paying commission or hidden kickbacks; they have no commission incentive to tell anyone about new options.
Successful businesses are digging into the weeds of their healthcare contracts and calling the bluff on insurance hiding data, kickbacks, and even restrictions on audits. No business would allow blank checks in any other contract and it remains baffling it is tolerated in healthcare. Only salaries are a higher business expense. Business and government leaders (such as the Trustees of TRS and ERS) should be demanding transparency on everything, not the least of which is commissions and all other forms of business steering. Gallagher, for example, was accused of hiding $4 million in kickbacks from a Florida school district (Osceola ISD). Gallagher faced litigation from the school district for what Gallagher euphemistically referred to as “supplemental compensation” in a footnote of their contract. They settled prior to going to trial.
Drug prices are another key driver of costs and are dominated by three Insurance/Pharmacy Benefit Managers (PBMs) corporations controlling 80% of the market. Generic drugs’ direct form mail order pharmacies are one-tenth the amount consumers pay in copays and often inflated even higher to the business or government. The formulary is often restricted to what creates the most profit for the Insurer/PBM company, which is the same corporation. “Specialty” drugs are frequently required to come from the very “specialty” pharmacies the Insurer/PBM owns as another avenue of profit, that is also squeezing out independent pharmacies. The Insurer/PBM can label many declared drugs as “specialty” drugs, including insulin, so that the patient is required to go through the “specialty” pharmacy they own and pay the higher “specialty” price. This also blocks out independent pharmacies from offering cheaper and more competitive prices. It is forcing patients essentially into a healthcare monopoly.
Importantly, the failure to understand the data and monitor these various forms of kickbacks can expose the business to litigation as a failed fiduciary of the employees’ money. The HR team uses the employees’ money for benefits. The business has a fiduciary responsibility. Brokers are known to offer kickbacks to the decision makers of the business whether in the C-Suite or HR. Johnson & Johnson, Mayo Clinic, and Wells Fargo are facing litigation by their own employees as failed fiduciaries for the prescription drug plans.
Fortunately, there are practical solutions to all of these problems. First, businesses and governments at all levels must shop the market for benefit advisors who can demonstrate complete transparency from their commissions and any kickbacks, which should be zero conflicts and kickbacks.
Secondly, run all healthcare contracts through AI just like any other business deal. Mark Cuban uses DPC for his staff and uses a standardized transparent contract for insurance. There are many independent benefit advisors making direct contracts with hospitals, surgery centers, and pharmacy plans, and starting with direct primary care. Direct contracts bypass these higher costs and save everyone money, except the middlemen, from 50-to-90%.
Reform is available now, but the resistance from those making so much off of fear in healthcare will fight before losing their business. Businesses and governments that fail to reform face litigation from employees or revolt from taxpayers. Businesses and individuals can not only prevent premium increases; they can reduce costs dramatically.
We are held hostage to our own health by traditional insurance plans, but there is a better way. More than slowing healthcare inflation, businesses and individuals can lower costs now. If not now, when?
Dr. Clifford Porter is the Senior Fellow for Healthcare at the Texas Public Policy Foundation. He is a primary and urgent care physician, founding Texas Direct Medical Care, using the Direct Primary Care model. Dr. Porter joined the growing number of physicians leaving corporate and government healthcare working to reform medicine and restore freedom and control to both patients and physicians.