The US group health insurance market is not just facing a pricing blip but dealing with a structural crisis baked in by the Affordable Care Act (ACA), pharmacy benefit manager (PBM) conflicts of interest, and a benefits broker distribution model that rewards inaction.
That’s the view of Dan Thompson, Chief Benefits Officer for Vensure Employer Solutions, based in Phoenix, Arizona, which oversees benefits for approximately 2 million American workers across roughly 27 professional employer organizations (PEOs) and 29 payroll bureaus.
"The financial construct of what we know today has, over almost a 100-year period, become a very, very dangerous thing to consumers without a real alternative that's clear," Thompson told Insurance Business Benefits.
Thompson traced the inflection point to March 23, 2010, the day the ACA was signed into law. The legislation's medical loss ratio (MLR) requirement mandates that carriers in the large-group market spend at least 85 cents of every premium dollar on claims, retaining a maximum of 15 cents.
He highlighted that, prior to 2010 health insurance premiums and wages tracked one another at a roughly comparable rate of increase but post-2010 premiums went (in Thompson's words) "hockey stick," while wages moved in a slow, flat line.
For example, New York state small-group carriers filed for an average rate increase of 23.7 percent for 2027 - with some individual carriers requesting as high as 28 percent - before the New York State Department of Financial Services (DFS) intervened and approved an average increase of 8 percent, saving small businesses approximately $1.25 billion compared to what carriers had filed.
More than a third of US employers saw health plan premiums rise 10% or more at their last renewal, even after making plan changes, according to Gallagher's 2026 Workforce Trends Report - Benefits Benchmarks, as reported by IBB.
Thompson reserved some of his sharpest language for pharmacy benefit managers.
In the 2025 Peterson-KFF Health System Tracker, Excellus Health Plan, Inc. of New York, stated that “Specialty medications are used by approximately 2 percent of our members, but they account for more than 50 percent of total drug spend.”
That concentration of spend, including the rise in demand for glucagon-like peptide-1 (GLP-1) drugs including Wegovy, Ozempic, Mounjaro, and Zepbound, is not accidental according to Thompson.
"PBMs own the health insurance company so they could see the patients' behaviors and what they're getting," he said, adding that this may provide incentive to avoid lower-cost supply options.
Thompson said some of his firm’s clients have personally imported GLP-1 medications through international sourcing programs at 90 percent less than the cost through their group plan.
For employers in the 51-to-499-employee range, Thompson sees meaningful momentum toward self-funding, continuing a downward trend for fully insured small group enrollment, which fell 41% between 2013 and 2024 according to KFF research reported by IBB.
The shift only delivers results if it is managed deliberately, Thompson cautions.
"You must have deliberately good and highly managed care pathways," he said, citing the need to evaluate surgeon safety records, monitor readmission and infection rates, and direct employees toward high-quality providers before a procedure takes place.
Vensure's own internal plan - covering 3,300 employees - is the proof of concept Thompson returns to most readily. The plan uses reference-based pricing, surgery bundles, direct hospital contracts, manufacturer assistance programs, patient assistance programs, and voluntary international drug sourcing. The result, Thompson said, is zero percent premium increases for six consecutive years. Vensure also covers 100 percent of employee premiums and 25 percent of dependent premiums, he noted.
For single-member LLCs and groups of two to 50 or two to 100 employees - the most heavily regulated cohort - he argued that regulators must create mechanisms allowing non-commonly owned businesses to band together through trust or association health plans. Several states, including California, have effectively prohibited these structures.
The structural cost problem has a distribution corollary, Thompson argues, and it may be just as intractable if the industry is resistant to change.
"The larger your increase, what happens to the broker? The larger they get paid," Thompson said. "It's the perverse design of the distribution."
For IBB's core audience of group benefits advisors, the challenge is direct: the brokers most likely to help employers navigate toward self-funding and alternative models are competing against peers whose compensation structures make the status quo profitable. Thompson, who describes himself as "a recovered employee benefits broker," is unsparing in that assessment.
IBB has examined the growing fiduciary liability risk facing benefits brokers who fail to act in plan sponsors' financial interests, a legal pressure that is beginning to concentrate minds in ways that commission incentives alone have not.
Two problems, Thompson concluded, must change simultaneously: "The financial model of the product itself and the distribution structure."
