It’s been seventeen years since we placed our first client on a Reference Based Pricing model. The results were compelling with first year savings exceeding 44%. Subsequent years proved equally successful with continued savings and no reduction in benefits.
You would think a cost reduction of this magnitude coupled with better benefits would attract more plan sponsors than it has over the past seventeen years.
It hasn’t.
According to a 2024 Lockton National Benefits Survey Reference Based Pricing has captured only 6% market share leaving 94% of the market clinging to traditional managed care plans that continue to fail to control costs.
Annual rate increases, cost shifting to plan members, less choices continue to plague 94% of the market impacting a majority of the American middle-class year after year. Benefits have been eroded to a point many plan members are left functionally uninsured.
Plan sponsors, while under the influence, shrug and sign off on each renewal with a Walter Cronkite ending – “And that’s the way it is.”
