Today, about half of the U.S. population — or 180 million Americans — receive their health care insurance
Health care costs continue to rise against the backdrop of lingering challenges: poor population health metrics, lack of primary care,
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Economic incentives: The heart of the problem
Addressing this cost-quality conundrum requires a deeper look at the incentives of how health services are contracted and provided to consumers. For too long, models of care delivery for employees have incentivized providers for the number of patients they see or services they perform, rather than improvements in patients' health and well-being. And often, these products don't report on quality.
Government programs are further along with respect to financial accountability based on outcomes. For example, fewer than 17% of commercial insurance payments in 2022 were tied to two-sided financial risk for improvements in health outcomes. Comparatively speaking, in Medicare this number is 34% and federal health officials have set the ambitious goal of ensuring 100% of Medicare beneficiaries in accountable care relationships by 2030. It is likely no coincidence that per person Medicare cost growth has slowed significantly in the last decade, while employer-sponsored insurance costs have continued to rise.
The economics of employer-sponsored health care are largely based on payments for volume. This is true for how employer health care dollars flow across the entire U.S. healthcare system. Hospitals need to be full to survive. Doctors get paid when patients come into their offices. Insurance companies and brokers commonly get paid irrespective of the quality or efficiency of services provided. Drug companies don't have to take risks for the value of their products.
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Collectively, each of these stakeholders has power to shape the system, but none of their economic incentives are aligned with delivering high-quality care to employer-sponsored beneficiaries while reducing unnecessary spending. Alignment around value will require actors from across the full range of stakeholders to agree and proceed into a future that is better for patients. It will also require that employers and their contracted health plans, brokers and consultants become more active and accountable stewards.
The good news is that new models have the power to bring more value directly into the system. Consider companies like Aledade, apree, Centivo, and Personify Health, which are built on the premise of aligning their business success with better care for patients and lower cost for employers. In Columbus, Ohio, JPMorgan Chase and Vera Whole Health, part of apree health, launched five on-site and near-site advanced primary care centers.
Today, those primary care centers have achieved a NPS of 86.1. In Florida, Aledade and Florida Blue have equipped primary care practices with data, workflow support, and aligned incentives for the care of commercial members. In 2022, those practices outperformed the market in rates of diabetes control and cancer screenings, reduced hospitalizations and emergency room visits by twice as much as the regional trend and produced nearly $14 million in savings.
These two examples highlight the central role of primary care in accountable payment and delivery models. Employers can typically benefit from spending more on primary care with strong coordination and guidance for patients — leading to less reliance on specialty and emergency room care. By preventing the need for expensive downstream care, patients and employers both win.
Strengthening employer engagement
Employers are buying insurance, but they are not typically health care experts, and want to trust their intermediaries — insurance companies or brokers — to craft strong solutions to these problems. Brokers play a valuable role in the contracting process but can too easily accept the status quo. If a broker is paid by an insurance company to promote a fee for service product that doesn't really drive quality or value, we can't expect to be moving to a more efficient place.
The system won't change if employers don't demand greater value. Of course, with rising costs and deteriorating outcomes, employers will need to champion change. And our view is that those who shift to new models sooner will realize benefits sooner in employee retention and engagement.
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There are three key actions employers can take to accelerate this change.
1. Demand better primary care
Primary care remains central to better health, enabling patients to have a deeper, more coordinated connection to their care. Primary care providers are also the most economically aligned with driving higher quality and lower costs through better health. Providing a refundable credit for advanced primary care would reward employers for investing in models offering this "front door" approach to care, while simultaneously leading to stronger engagement and better health among their employees.
2. Drive to outcomes-based payment
Only a small percentage of provider contracts are established on a full-risk capitation model. Yet evidence shows that implementing this model gives providers the autonomy to offer the right care at the right time — all while being responsible financial stewards.
3. Empower the patient
Both solutions enable patient engagement. Why not reduce or eliminate copayments when an employee chooses better, more cost-effective care?
These actions will bring meaningful improvements that will strengthen employer-sponsored insurance, ensuring it works better for businesses and the millions of workers who rely on it.
