High-quality, Low-cost Healthcare Benefits Are Possible – Here’s How

By Brett Turman
May 5, 2023

When was your last bad dream?

You might not realize it, but you’re living in one today: Healthcare costs in the U.S. currently make up more than 40% of global healthcare spending.1 It’s a growing problem – one that can’t be solved by doing what’s always been done.

Let’s take a deep dive into why and what we can do to fix it.

The Real Cost of Healthcare

America’s Prescription Drug Problem

Prescription drug costs are a major, but unsurprising, contributor to this problem.

On average, each American spends $1,443 on prescription drugs, compared to $749 per person in other countries.2 In Europe, drugs are priced by the government based on the benefit the drug will have for patients, but that’s not the case here.

For American manufacturers, the cost of making a drug is often much less than the price they charge patients – and the reason why is two-fold: to make a profit and cover the high cost of testing and releasing the drug.3

Critical Care at Sky-high Prices

Healthcare services play a big role in this nightmare, too.

For example, an MRI in the UK costs approximately $4502. In the U.S., the cost of healthcare services can vary wildly based on location. The average patient doesn’t know how much a service costs – that is, until they get the bill from their insurance company.

Public and private insurers in the U.S. have various out-of-pocket costs, funding sources, and rules, so it takes a variety of billing professionals to process claims. These billers must be trained and paid, and that’s reflected in premium prices.3

This leads to a bigger problem.

According to Harvard Magazine,4 nearly half of all Americans have delayed healthcare due to its high cost. Patients end up paying more in the long run, as their conditions advance and become harder to treat and cure. If preventive care were more affordable and accessible, patients could save their money and their lives.1

It’s a vicious cycle.

Americans underspend on primary care but overspend on prescription and hospital costs. Due to these two factors, employers' costs rise year over year. So, what happens? Employers start reducing benefits and shifting costs to their employees, of course.

Combined with inflation, this is crushing middle America: Roughly 100 million Americans have racked up nearly $200 billion in medical debt. What’s more, this debt drives around half a million people to declare bankruptcy each year.5

No, this isn’t just a bad dream. It’s the reality too many Americans are living today.

The Risk of Traditional Plans

Traditional plans only multiply the problem.

Under a fully-insured healthcare plan, employers have little control over plan design. These off-the-shelf plans are inflexible and leave few options for employers to personalize their benefits to meet the specific needs of their employees.

The whole point of insurance is clear-cut in theory, but complex in reality: paying to shift risk from one party to another. But this risk largely falls onto the employer – partly due to the fact that health insurance isn’t really insurance.

In a fully-insured plan, you pre-pay for any claims that occur during a particular year. If you overpay at the beginning, then the carrier pockets the difference. If you underpay, you get a huge renewal. We refer to this as deferred, not insured: This plan involves you transferring all your costs (but no savings) forward by twelve months.

Traditional self-insured plans don’t fare much better.

Simply put, these plans are too risky for the smaller employer. Even if you’ve purchased stop-loss insurance to protect yourself, a large, multi-year claim can lead to a laser and/or huge premium increases.

The ParetoHealth Solution

ParetoHealth’s mission is to make self-insurance affordable, accessible, and less risky for small and mid-sized businesses. We also believe in patients getting the care they need when they need it – at the right price.

How ParetoHealth’s Program Works

When a small or mid-sized business chooses ParetoHealth’s employee benefits captive program, they join a community of like-minded employers committed to offering better employee benefits, reducing waste, and innovating healthcare on their own terms.

We refer to this as a coalition of the willing – a group of employers that grew tired of the status quo. They stopped doing the same thing and expecting different results. They grabbed the bull by the horns because changing healthcare for your organization means peeling back the onion and proactively managing claims.

Members own the captive.

The captive operates on a large scale with a large volume of stop-loss insurance, and so, can offer true multi-year protection from large and ongoing claims. Due to the program’s size and scale, it can offer superior terms such as rate caps and no new lasers, which are unavailable to most smaller employers purchasing stop-loss. For the first time, self-insurance becomes a viable option for these employers.

Members are in control of their plan, and they have the power to:

  • •   Choose their network
  • •   Select their plan design and TPA
  • •   Cut costs and improve coverage
  • •   Offer innovative healthcare programs, including:
  •     •   Prescription drug cost control
  •     •   Care coordination services
  •     •   Oncology management

In this way, we can align the incentives of employees to get the best possible care with the incentives of the employers to provide cost-effective options.

The Industry’s Strongest Stop-loss Policy

ParetoHealth’s Members have access to the strongest stop-loss structure in the industry.

This means that they’re protected against large, ongoing claims and pay small claims as they happen without overspending or deferring costs.

But that’s not all: There is strength in numbers in the community, which creates a long-term buffer against stop-loss premium increases. Thousands of employers have access to their own data, they’re proactively engaged in cost-containment solutions, and they’re providing their employees with cost-effective, quality care.

Here, positive results aren’t difficult to come by.

Integrated Cost Management Platform

Managing healthcare costs is central to what we do.

ParetoHealth’s Integrated Cost Management (ICM) platform makes that happen.

Medical Cost Intelligence

ParetoHealth analyzes Members’ claims data to identify savings opportunities:

  • •   High-impact interventions: Our care-coordination partners look for signs of potential high-cost care needs such as cancer and neonatal events, then intervene to connect employees with providers who can deliver the best care at the lowest cost.
  • •   Data-driven playbooks: Our analytics partners and in-house experts work together to create playbooks with potential “plays” to cut costs. Members then work with their benefits consultants to implement these easy, personalized strategies.
Pharmacy Cost Intelligence

Pharmacy benefits can represent 20-25% of a program’s costs. With pharmacy prices on the rise, we continuously look for ways our Members can save – and they do: Members have potential annual savings of 25-30%.

  • •   Formulary management: ParetoHealth’s formularies support low, medium, and high drug cost-control approaches. Our experts actively look for savings opportunities.
  • •   Pharmacy benefits management advisory: Our experts negotiate pharmacy benefits manager (PBM) contracts and monitor their performance to ensure they comply with preferred pricing and rebate guarantees.
  • •   Specialty drug management: We can carve specialty drugs out of Members’ PBM contracts and use advanced analyses of clinical value, appropriate use, and other factors to reduce claims for very high-cost drugs.
  • •   Pharmacy playbooks: These personalized strategies reduce costs by replacing brand-name drugs with generics, finding low-cost therapies for high-cost medical conditions, and ensuring drugs are claimed through the pharmacy benefit – and more.

See What You Can Save

The nightmare price of American healthcare isn’t going to change anytime soon.

The good news is this: ParetoHealth can help you wake up, break out of the 12-month insurance cycle, and gain true control of your plan. Each day, we work hard to help small and mid-sized employers reduce the costs – not the quality – of their employee healthcare benefits.

Ready to get on the path to better benefits? Contact us to see what you can save.


1. World Health Organization. (2021). Global expenditure on health: Public spending on the rise? Retrieved from https://apps.who.int/iris/bitstream/handle/10665/350560/9789240041219-eng.pdf#page=11
2. Investopedia. (2022). 6 reasons why healthcare is so expensive in the U.S. Retrieved from https://www.investopedia.com/articles/personal-finance/080615/6-reasons-healthcare-so-expensive-us.asp
3. Porretta, A. (2022). Why is health insurance so expensive? eHealth. Retrieved from https://www.ehealthinsurance.com/resources/affordable-care-act/obamacare-premiums-unaffordable-for-many-middle-income-people-in-2019
4. Cutler, D. (2020). The world’s costliest health care and what America might do about it. Harvard Magazine. Retrieved from https://www.harvardmagazine.com/2020/05/feature-forum-costliest-health-care
5. Bedayn, J. (2023). States confront medical debt that’s bankrupting millions. Washington Post. Retrieved from https://www.washingtonpost.com/politics/2023/04/12/medical-debt-legislation/0198c70e-d995-11ed-aebd-3fd2ac4c460a_story.html

There’s a Better Way to Do Employee Health Benefits

Join an upcoming webinar to learn how ParetoHealth turnkey employee health benefits solutions deliver the scale and resources mid-sized businesses need to self-insure with total confidence. By combining a captive model with comprehensive medical and pharmacy cost containment strategies, our members realize significant cost savings with multi-year protection.

Learn why 97% of members who join ParetoHealth, stay with ParetoHealth.

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