Employers Urged to Demand Transparency in Health Insurance Purchases

Employers are increasingly urged to seek greater transparency in the health insurance marketplace. Despite spending substantial amounts on health benefits—often their second-largest expense after payroll—many employers make these decisions without comprehensive data on how well their plans serve employees when care is needed.

Health insurance operates differently than other major purchases. Payment of premiums does not guarantee access to care, leaving both employers and employees frustrated when claims are denied or delayed. The lack of transparency in health plan performance creates significant challenges, as employers often select plans without knowing whether employees can effectively utilize the benefits they pay for.

Insufficient Data on Health Plan Performance

For decades, essential information such as denial rates, authorization timelines, and appeal outcomes has not been publicly available. According to Monique Yohanan, MD, MPH, a Senior Fellow at Independent Women, this absence of data results in employers comparing only premiums and benefit summaries. This limited approach was manageable when costs were lower, but the rising premiums outpace wage growth, making the current situation untenable.

The trend indicates that coverage rules increasingly dictate not only the costs of care but also whether it is provided at all. Employers currently lack basic information about their health plans, including how often care is denied and how long it takes to get approvals. In any other significant purchasing decision, such outcomes would be considered fundamental. Without this operational transparency, employers are essentially investing in a “black box”—committing vast resources to benefits whose performance they cannot assess or improve.

The Human Impact of Health Insurance Decisions

Health benefits are a critical component of employee compensation and risk management. However, many companies operate without insight into how these benefits are delivered. Employees, who believe they are covered, often discover limitations in their insurance when they are most vulnerable. This leads to frustration and a sense of betrayal, especially when individuals are forced to either forgo care or pay out of pocket despite having already paid thousands in premiums.

Yohanan compares the experience to purchasing a car only to find that it cannot be driven. When insurers deny coverage, they erode trust not only in themselves but also in the employers who selected the plans.

Efforts toward price transparency are essential. Legislation such as the No Surprises Act, passed at the end of President Trump’s term, aims to require insurers to provide estimates of care costs and coverage prior to treatment. Unfortunately, delays from the Biden administration have postponed the implementation of the Advanced Explanation of Benefits promised to consumers.

In addition, the Patients Deserve Price Tags Act, proposed by Senators Roger Marshall and John Hickenlooper, would mandate that patients receive transparent pricing for their care. While engaging consumers is vital, it is important to recognize that employers hold significant leverage in the insurance market. With more than 165 million people receiving health coverage through employers, this collective purchasing power can drive accountability and performance in health plans.

To effectively manage costs and maintain workforce trust, companies must prioritize understanding how their health plans perform. In a system where expenses are high, purchasing health insurance without adequate information is no longer a risk that employers can afford. Employers and employees alike deserve clarity regarding the benefits being provided, ensuring that coverage is not just a theoretical concept but a practical reality that supports health and well-being.

Yohanan emphasizes that a dual approach is necessary: both price transparency and comprehensive data on care delivery must be pursued. By demanding this information, employers can make informed decisions that truly benefit their employees and foster a more trustworthy insurance landscape.