Free Market Myth v. Fact

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Myth: My broker always has my best interest in mind.

FACT: Your broker, agent, or consultant MAY have your best interest in mind, but not always. Many brokers, agents, and consultants earn the majority of their income from commissions, overrides, and bonuses from third parties that are NOT the employer.

In a recent article published by NPR, Insurers Hand Out Cash and Gifts To Sway Brokers Who Sell Employer Health Plans, author Marshall Allen outlines the dirty little secret of the broker world. It is common for brokers to be highly compensated by carriers, earning additional high-dollar bonuses for writing more business. Additionally, if a broker is compensated based upon a percentage of premium, when an employer’s costs increase, the broker gets a raise.  Brokers who work in the best interest of the employer do exist. To find them, look at the FMMA member list or at

Myth: You get what you pay for. Higher quality is more expensive.

FACT: In reality, the vast majority of the time better quality care is almost always a LOWER price. When an FMMA member facility sets their up-front bundled price, they are incentivized to make sure the patient has few to no complications and is back on their feet as quickly as possible.  This is because they have set a single price for all patients, regardless of who they are. This pricing structure drives efficiency.

Anyone can lie about quality. Quality metrics often just go to the highest bidder through “best hospital lists.”  But when there›s a financial impact tied to the quality outcome, providers have to be more accountable.

Myth: I have to offer a Qualified High Deductible Health Plan with an HSA to save money for my

company and my employees.

FACT:  There are many types of benefit plan designs that an employer can offer that are not tied to the rules and restrictions placed on HDHPs with HSAs. If any employer wants to lower their actual claims costs, incentivizing employees to use valuable free-market focus providers can drastically impact their plan.

When an employer combines an HDHP with free market options, the incentive to use a low cost provider is lost for any claim that is higher than the participant’s deductible and the employer has very few options for true incentives.  Additionally, an employer cannot offer Direct Primary Care as a benefit option due to IRS regulations.

Instead, consider having a non-qualified plan and offering a Health Reimbursement Account (HRA). Not only does this set-up enable you to incent the use of high value providers, but any funds not spent stay with the employer.   

Megan Freedman

About Megan Freedman

Megan Freedman has worked with self-funded benefit plans for more than 15 years. For the past 12 years, she has worked with The Kempton Group serving as the Vice President of Corporate Communications. Ms. Freedman has extensive experience not only in employee benefits, but also marketing, sales, account management, executive support, and member services. Ms. Freedman is the Executive Director of the Free Market Medical Association. She was recently featured on Kevin Price’s Pricing in Business Radio show and writes and co-authors many articles, white papers, and educational materials. She is licensed in Life, Health, and AD&D in Oklahoma and Texas.

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