The employer’s dilemma: When the fully assured plan no longer works, what is the next step for employers?

For decades, we have been faced with the same annual routine: pay your premiums. Home to renew renewal rates. Absorb increases or transmit them to your employees. Can you repeat?

It is the version of the advantages of Groundhog Day – and in 2025, in the midst of persistent inflation, economic uncertainty, change of work and general distrust towards the health system, that routine begins to decompose for an increasing number of companies. The model that has promised simplicity and consistency is now under the microscope because companies require better for themselves and their people.

For these organizations, the question is not to modify the current model. It is if the model still works. It may be time to completely rethink the structure – to the one that offers more transparency, flexibility and control for employers and employees. Because the next chapter of the benefits sponsored by the employer could very well be defined by which has the risk – and it is time for employers to face what they are financially capable or willing to assume this responsibility.

The status quo: responsibility without control

Almost 90 years after the adoption of the coverage sponsored by the employer, increased following a wage bypass solution of the era of the First World War, the fully assured model is largely alike. Transporters control the selection of carriers, employers pay bonuses and employees choose between a limited number of available plans.

The model is often described as “practical” and “simple” – and, for some companies, it can be. But for others, it is worth asking: what exactly, is suitable for the absorption of costs that you cannot influence? The simplicity that many employers appreciated once became more and more compensated by the limitations and the lack of agency – and the growing disconnection between responsibility and control.

Why adjustments and tools do not always move the needle

To improve the experience within the entirely guaranteed structure – and compete in a competitive labor market – many employers have turned to a variety of occasional solutions: employee well -being programs, virtual care providers, care navigation platforms, pharmacy benefits, etc.

These tools and programs have their place – and many offer real value. But for employers, the challenge is not a lack of solutions. It is a structure which, too often, their demands to innovate in the margins of a model that no longer adapts. Well-being programs and virtual care are useful, but they do not solve for deeper disparagration: the one where employers carry the financial weight of a system that they are not allowed to shape.

And although the largest employers can explore alternatives such as self-funded financing, on-site clinics or direct primary care, these strategies can be out of reach for many organizations and come with their own complexities and compromises.

For many, the fully assured model may look like the only option available – even when it is no longer the right adjustment for the workforce or the net profit.

The burden of the concentrated risk pool: why it is time for a wider approach

One of the least discussed challenges of the fully assured model is the limitation of risk within a population of an employer. When a handful of high -cost complaints – or even a huge – have a relatively small group, it can send perceiving renewal rates, even if the overall use is stable. In fact, a report by the American Health Policy Institute revealed that less than 2% of the members of the registered regime are considered high -cost applicants, but they represent more than 30% of employers’ spending. Employers – and as by -product, their employees – often absorb these cost increases which are more randomly linked than planning performance, with little room to minimize or mitigate the impact.

The approach of the defined contribution model – in particular through models such as the health reimbursement system for individual coverage (ICHRA) – offers an alternative. Instead of buying a single group plan, employers have established a fixed budget and allocating a monthly allocation to tax benefit for each employee. Employees use this allowance to buy individual health plans that correspond to their health profile and their unique preferences – whether it is a high eligible plan eligible for HSA, full general coverage or access to a specific supplier network.

The biggest differentiator? The model decentralizes the risk pool. Rather than being linked to the complaints of an employer, employees enter the broader individual market – where the risk is distributed over a broader population and bonuses adapt to large scale.

The results are also clear. Oscar Health’s recent data show that the vast risk pool of the individual market – stabilized on more than 24 million lives – has not only maintained the cost of health insurance. This in fact forced him, with 2024 trendy costs at around 4% lower than the costs of the employer.

Ichra represents more than a change in which presents the risk; It is a change in the way the risk is managed. For many employers, this change opens the door to a more stable and lasting advantages strategy.

Control recovery with the defined contribution model

Companies with the weight of unmanageable costs and employee coverage requests require more than just bypass – they need structural reset.

For employers who sail on the increase in costs and the evolution of employee expectations, the response is rarely another level of complexity of services. It is the emphasis on fundamental principles: the predictability of the budget, the flexibility of the plan and the ability to align investment with the impact. In this context, the recovery of control does not concern the resolution of the change; It is a question of reaffirming the property in a space where it has been far too difficult to achieve for too long. And it is for this reason that the defined contribution model – often implemented by an Ichra – is gaining ground. Helped by their brokers, more employers introduce the model into social benefits conversations as a strategic response to the modern market.

Although Ichra may not adapt to all commercial models, the model offers several advantages, in particular around the predictability of the budget and agility. Organizations can plan their advantages budgets in advance, adapt to financial objectives or labor changes and go from the management of reactive costs to an intelligent and proactive strategy.

Let go of the inherited model

It is understandable why many employers with the fully assured model. For some, it works. For others, it is familiar and in a complex system, familiarity has weight. But more and more, this familiarity has a cost – measured not only in dollars, but in missed opportunities to build a more adaptive, transparent and aligned advantages strategy

While employers and their teams are sailing in an economy that forces them to be more strategic and agile with each dollar they spend, the most important question becomes: do we stay with the insured entirely because he answers our objectives – or because this is what we have always done?

It is not a call for each employer to abandon the model of the next day. Instead, it is an invitation to organizations to take a break, to think and to assess whether the structure always supports the results for which they strive.

The transition of the inherited model does not concern the abandonment of what is familiar for the latest trend. This involves ensuring that the company’s social benefits strategy align with the needs of the workforce and the financial objectives of the organization. It is a question of exploring models which offer transparency, sustainability and an increased choice – for employers and employees.

We will not assist on the death of the fully assured model. But we are at the beginning of a broader change: the one who recognizes the need for new executives, new conversations and new levels of control. And this change could mark the beginning of an era of more adaptable and inclusive advantages – designed to work better for everyone.

Photo: BULAT SILVIA, Getty Images

This message appears through the Medcity influencers program. Anyone can publish their point of view on business and innovation in health care on Medcity News through Medcity influencers. Click here to find out how.