Dave Chase’s book The Opioid Crisis Wake-Up Call was an interesting read because Chase highlights many of the health insurance company games that add to the cost of healthcare in the United States without providing additional value. I’m skeptical of health insurance companies, and Chase’s book discusses some of the nitty-gritty details of misaligned incentives that lead to unending increases in healthcare premiums and costs.
An example that Chase highlights is early renewal discounts for companies that chose to stay with their current health insurance company or plan administrator. Throughout the book, Chase discusses how businesses are letting their employees down and allowing healthcare costs to skyrocket by accepting increasing healthcare costs from health insurance companies each year. Many companies don’t have someone who really understands healthcare or health insurance in charge of their benefits programs, and as a result those individuals are often more focused on not being yelled at by employees than on reducing costs and providing a valuable health insurance package. Insurance companies take advantage of this by pressuring businesses to accept increases in the cost of healthcare administration each year at rates far above inflation.
Insurance companies know that businesses don’t actually want to shop around for health insurance and they know that employees don’t want to have a change in insurance each year. Insurance companies will offer benefits for early renewals from companies, and as Chase writes, “Often these early renewals come with no-shop clauses. So, a 20 percent rate increase may only be a 15 percent if you sign today and agree not to shop the competition. This should be viewed as a red-flag, not a great deal on a premium reduction.”
Insurance companies position themselves as offering a good deal, but they are increasing the cost of the insurance plan by 15%. Busy employers with small HR staff often see this as a win because it reduces their effort and while employees see costs rise they don’t have to hassle with changing insurance and unknown insurance processes. This is part of why premiums in the United States are rising so fast. Insurance companies hide information and data, and make it difficult for overwhelmed staff to pick benefits that will truly help employees.
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