Why Healthcare Benefits Programs Are Hurting Your Business and Your Employees
The Current State: High Costs, Low Insight
Nearly two-thirds of employers are self-insured. In theory, self-insurance should give employers more control. In practice, it rarely does.
Most employers rely heavily on a fragmented network of Third-Party Administrators (TPAs), Pharmacy Benefits Managers (PBMs) and other Intermediaries to process claims, maintain compliance, and manage programs and data. This structure offloads an employer’s agency but not their fiduciary responsibilities. In addition, it creates several foundational barriers:
Employers fund the system but lack access to meaningful data.
HIPAA and contractual restrictions limit what intermediaries share.
Comprehensive analysis is hampered by claims data that is siloed across medical, pharmacy, dental, vision, and mental health vendors, as well as in several systems like payroll, workers' comp, etc
The result is employers can’t prioritize where their healthcare dollars are going—or how employee healthcare trends connect to absenteeism, productivity, disability claims, or turnover. Organizations know their total spend, but not why it is rising or where it goes.
The Current Model: Built for Transactions, Not Outcomes
Benefits intermediaries and employers are typically focused on plan administration with business models designed to manage volume, not value. Most intermediaries are compensated for processing claims—not preventing or reducing them. And because a single plan document must govern multiple vendors, each point solution must demonstrate adherence to the plan design, even when success depends on coordination with other parts of the program. For example, a pharmacy benefit may require the use of a biosimilar, but that only works if medical providers are aligned and prescribing accordingly.
With data scattered across multiple entities and little integration between them, employers typically lack transparent access to a unified picture of the actual value their benefits programs deliver to the business and its employees.
Why the Current Model Is Unsustainable
Healthcare spending continues to grow at twice the rate of inflation. Employers and employees are absorbing significant year-over-year cost increases with limited access to novel programs that can affect change. Several structural issues make the current model untenable:
Misaligned incentives across intermediaries, employers, employees and benefits vendors.
Opaque data that prevents strategic planning.
Limited innovation focused on prevention vs treatment.
One-size-fits-all benefits misaligned with workforce needs.
Almost every CHRO understands that prevention is cheaper than treatment. Yet most lack the data infrastructure to act on that knowledge. The result is cookie-cutter offerings that have not kept up with healthcare delivery.
Now Is the Time for Change
Three accelerating forces make this the moment for employers to rethink their approach to healthcare benefits:
Heightened Regulatory Scrutiny - Employers face increasing pressure to demonstrate oversight, ensure parity between mental and physical healthcare, and protect plan fiduciaries.
Changing Employee Expectations - More than 40% of employees now choose high-deductible health plans and expect proactive, personalized support from their employer—not just coverage.
Consumerization of Healthcare - Employees want convenience, flexibility, and personalized access across digital, in-person, and on-demand care.
These forces are redefining what it means to be a competitive and responsible employer.
A Blueprint for the Future
The future of employer-sponsored healthcare requires transparency, integration, and measurable value. Leading organizations are already moving in this direction by:
Aligning Benefits With Business Goals - Using analytics to connect health trends to absenteeism, retention, and productivity.
Integrating Data Across All TPAs and Vendors - Creating a unified data set to illuminate workforce health needs and opportunities while supporting business objectives.
Delivering Real-Time Insight - Equipping benefits leaders with dashboards that reveal trends, risks, and ROI.
What’s Working: Innovations in Practice
Forward-looking employers are already demonstrating what is possible with integrated, outcomes-driven benefits strategies:
Cost Management: A full-spectrum GLP-1 program cut costs by 30% with equal or better outcomes.
Productivity Gains: Neurodiversity support programs improved engagement and reduced turnover.
Injury Reduction: Virtual physical therapy for field workers reduced injuries and delivered immediate ROI.
Benefit Integrity: Advanced analytics identified FMLA and disability misuse, reducing fraud and accelerating return-to-work.
The Path Forward
The message is clear: healthcare benefits programs must evolve from opaque cost centers into strategic business assets. Employers must demand that intermediaries provide data transparency, align benefits with multi-dimensional workforce data, and offer benefits programs that connect health outcomes to business value. The path forward isn’t just about managing costs. It must ensure good outcomes tied to business objectives, which, in turn, will contain costs.
Those who lead this transformation will strengthen employee resilience, reduce costs, and unlock real strategic business advantages.
