RAND and USC: Self-Insured Employers Still Can't Curb Health Costs

Family health premiums now average over $28,000 a year, and even self-insured employers — the companies that pay medical bills directly — can't rein in what they spend. That's the core finding of RAND and USC health researchers who spent the past decade's worth of transparency policy and found it wanting.

Some small companies now report spending more on health insurance than they make in profit, according to the researchers' account published on Fortune.com. The federal response has been price transparency: if companies know prices, the theory goes, they can shop around. Disclosure alone isn't enough, the researchers were told during interviews with employers, benefits consultants, claims administrators, and legal and policy experts. Few employers outside the very largest can turn price information into leverage.

Why can't employers that pay the bills control them?

Self-insured plans cover two-thirds of the 165 million Americans who get insurance through their jobs. These employers should have the clearest line of sight into health costs. They don't, because they typically hire a third-party administrator — a TPA — to assemble the doctor and hospital network and process claims. The arrangement works when the TPA's incentives align with the employer's. Often they don't.

Market experts pointed to specific fees as evidence that saving employers money isn't always the TPA's first concern. One, the "shared savings fee," was described as drastically inflating employer costs. A legal expert gave a hypothetical example: a provider bills $100,000, the TPA negotiates it down to $1,500, then charges the employer $30,000 for negotiating that discount. The employer sees a single $31,500 claim.

"I don't think they really tell you that $30,000 of that is a fee," the expert said.

What happens when employers demand a fee breakdown?

Recent regulations require fee disclosure in select cases. Even then, employers hit a wall. National insurance carriers have bought up independent administrators and bundled specialty vendors into all-in-one packages, leaving few places to take business. Switching TPAs usually means changing provider networks, which draws pushback from employees.

The fixes experts say are worth pursuing include:

• Contract terms that cap fees and require data access
• Transparency requirements with actual enforcement teeth
• Clearer rules on whether administrators, not just employers, bear fiduciary duty to spend plan dollars wisely

Each avenue has limits. Enforcement resources flow to employers big enough to demand them. And a well-informed employer can't negotiate hard without a credible alternative.

A handful of self-insured employers have tried opting out of the system entirely. Some contract directly with local hospital systems. Others have shifted to fully insured coverage or sent employees into the ACA market with a defined premium contribution covering part of their costs. Those paths demand a geographically concentrated workforce, deep administrative capacity, or a stable individual marketplace — conditions most employers can't meet.

What did Congress do about PBMs?

This year, Congress enacted new transparency rules for pharmacy benefit managers as part of the Consolidated Appropriations Act of 2026. The rules require extensive disclosure to employers and limit some PBM fee practices.

The researchers argue the rules need to go further. Enforcement can't assume every employer has the power, leverage, and resources to enforce its own rights. And regulation needs to move beyond PBMs and reckon with an industry consolidated to the point where knowing the price doesn't mean you can take your business elsewhere.

For the two-thirds of job-based insurance holders in self-insured plans, that consolidation — not the absence of price data — now looks like the binding constraint on cost control.