Imagine a grocery store with no prices listed anywhere. You fill a cart, reach the register, ask what it costs, and hear: “Don’t worry about it — you’ll get a bill later.”
Weeks on, an invoice arrives. What you owe depends on which location you shopped, your membership status, a negotiated discount you were never allowed to see, and rules you never agreed to. A twelve-ounce coffee might run $2.50 at one store and $10.00 at another location of the same chain across town, and you would have no way of knowing until long after you drank it.
Nobody would tolerate this in groceries, travel, clothing, or dining. It is exactly how employers buy healthcare, every year.
The Annual Cycle
The routine is familiar. Meet with a broker. Submit a census. Receive carrier proposals. Compare premiums. Select plans. Run open enrollment.
Then healthcare disappears from the executive agenda. Throughout the plan year, employees present their cards, receive care, and hope the bill is reasonable. When anyone asks what a service actually costs, the answer is the same one: you’ll get a bill later.
The result is a price variation that would be indefensible in any other market. The same MRI, same machine, same scan, same city, can cost $450 at one facility and $4,000 at another.
Not because of a quality difference. Not because of better outcomes. Because the price is hidden and nobody is accountable for it.
Then renewal arrives, rates rise, employers shift more costs onto employees without data explaining why, and the cycle restarts.
The System Is Working as Designed
Healthcare gets described as broken. Research from Health Rosetta and other employer-focused policy work suggests something harder: it is working exactly as designed, decision by decision. Just not for the people funding it.
The pattern is consistent:
- Providers inflate billed charges
- Insurers negotiate opaque discounts behind closed doors
- Employers never see real prices or real data
- Everyone profits except the party writing the check
PPO networks are the clearest illustration. Built in the 1970s and 1980s to create genuine price competition, they rested on a simple trade: providers accepted lower reimbursement in exchange for guaranteed patient volume.
That leverage is gone. Nearly every provider is now in-network with at least one plan. When every provider is preferred, no provider is disciplined on price. Prices drift away from fair market value, volatility rises, and employers manage risk they cannot see.
I wrote previously about what this means for business owners who value independence. This is the machinery underneath that argument.
Second-Largest Expense, Least Managed
For most organizations, healthcare is the second-largest operating expense after payroll. It is also one of the only major costs that is:
- Purchased with no upfront pricing clarity
- Renewed annually with expected increases in the range of 7% to 14%
- Reviewed only after the money is already spent
No executive would accept that arrangement in any other category. In healthcare, it has been normalized.
The better news is that changing it does not require tearing out your health plan overnight.
A Practical Blueprint
According to Health Rosetta, employers who redesign their plans around transparency, competition, and aligned incentives routinely reduce total costs by 20% to 40% while improving employee access and satisfaction.
Implement value-based direct primary care. Roughly 90% of health issues can be resolved at the primary care level. Better access reduces misdiagnosis, ER visits, and unnecessary specialist referrals — healthier employees produce lower downstream claims. Our guide to value-based primary care covers the models in detail.
Move away from broad PPO networks incrementally. Open or high-performance networks direct care toward providers with transparent, fair-market pricing, which restores actual competition.
Take control of pharmacy spend. Pharmacy now runs 20% to 25% of total healthcare costs. Traditional PBM contracts hide profit in spreads and rebates, and transparent models routinely produce 20% to 40% in pharmacy savings. Start with what spread pricing actually is.
Add member advocacy and care navigation. Dedicated advocates help employees choose high-value providers, compare prices, schedule care, and resolve billing problems. Typical results run 12% to 18% overall savings alongside a materially better employee experience.
Align incentives around high-value care. Zero-dollar copays for primary care, routine labs, imaging, and elective procedures reduce avoidable ER visits and overuse of specialty care while improving chronic condition management and claims predictability.
Aligned incentives reduce volatility and restore fiduciary control. That is sustainable cost management, not an annual fire drill.
A Pricing Problem, Not a Quality Problem
The United States does not have a healthcare quality crisis. It has a pricing and accountability crisis.
Employers who solve transparency and competition stop playing defense at renewal. Instead of celebrating a less-bad increase, they get predictable costs, measurable ROI, more room in wages and benefits, stronger EBITDA, and savings that compound year over year.
Healthcare should be managed like every other critical business function — with real data, discipline, and intent. Stop accepting opaque pricing. Stop paying for care nobody needed. Build a plan that works for your business, not for the intermediaries standing between you and it.
The full framework is laid out in our overview of the Health Rosetta Blueprint.
Contact
Mike Otis, REBC — Vice President of Employee Benefits, Health Rosetta Advisor 770-405-6301 · mikeo@palomarins.com Employee Benefits at Palomar · Contact us
Founded in 1954, Palomar Insurance is one of the oldest independent agencies in the Southeast, with six locations across Alabama, Georgia, and Mississippi.
