the bill your company pays and never reads

here is something about your health coverage you probably do not know. i did not either until a founder walked me through it this month.

if you work for a company of any size in the united states, there is a strong chance your insurer is not insuring anything. roughly eight in ten large employers are self insured. the card in your wallet carries a famous name, but that company is an administrator. a pass through. when you land in an emergency room and the bill is twenty grand, your own employer pays it. your cfo pays it, out of company money, and nobody tells you.

about a quarter of what gets spent is waste. that is over a trillion dollars a year.

now hold that up next to the incentives.

brokers are often paid a percentage of spend, so when the hospital charges more, the broker earns more. administrators are often paid per claim, or per employee per month, so more sickness is more revenue. hospitals take the largest share and their costs have grown faster than anything else in the system for twenty years.

every party in the chain does better when the number goes up. except the one writing the cheque.

the founder came to this after a long career in machine learning, part of it on the insurance side, so she knows precisely who earns what. her product is transparency. pull the public filings, build a cohort of companies your size in your industry, and show a cfo that they pay their broker ten percent while their peers pay six. or that the same scan costs them a thousand dollars and costs the company down the street half that.

the reaction is always the same single word. what. because there was no way to know before.

and here is the part i respect most. she charges a flat fee. not a share of savings, not a percentage of anything. she told me those incentives are problematic for her personally and not something she wants to be part of.

that is a real decision with a real cost, because a percentage of a trillion dollars of waste is a far better looking pitch deck than a flat fee.

before you go fix a market, find out who gets paid when the number goes up. that one question tells you who your customer is, who your enemy will be, and which of the two writes the cheque. it also tells you what your own pricing model will do to you in three years, once your revenue quietly depends on the problem continuing.

if your customers stopped having the problem tomorrow, what happens to your revenue?