It appears that most private companies look at how their health insurance plans impact their budgets rather than how they benefit or detract from the health and well-being of their employees, according to a new Stanford study.

There are few studies out there that examine how employers manage their health benefits, including assessing the extent to which employers emphasize the financial aspects compared to other dimensions of health insurance plan performance. So the researchers conducted a national survey to assess what companies focus on when choosing their health plans: the costs of the plan or the employee experience, access to care, and health equity.

The study published in JAMA Health Forum used a sample of randomly selected human resources administrators from 221 companies with at least 50 employees. They found that most HR administrators made their decisions based on the cost of the health-care plans rather than the nonfinancial performance of the providers.

“Our findings suggest that companies focus on what their health plans cost the company rather than how they benefit their employees’ health and well-being,” said Sara Singer, PhD, MBA, a professor of health policy and senior author of the study. Singer is also an associate director of Stanford’s Clinical Excellence Research Center (CERC.)

Their survey found, for example, that while 74% of companies tracked trends in health benefits costs, only 8% tracked the time employees spent getting questions answered by their plan providers; just 7% tracked how often employees delayed getting care—such as seeing a doctor or filling a prescription—because of the actions of an insurance company.

“Surveys consistently show that health insurance is a very important employee benefit and companies spend many thousands of dollars per person providing access to health care to their employees,” said Jeffrey Pfeffer, PhD, an organizational behavior professor at the Stanford Graduate School of Business and another author of the paper.  “It is important, therefore, to measure how well health plans are meeting their presumed objectives of helping employees access care with a minimum amount of hassle.” 

Measurements Matter

To improve health plan performance, the researchers said employer measurements and decision-making need to go beyond financial gains and losses.

“Given employers’ large role in the health-care ecosystem, what employers measure may affect access to care and how employees and their families interact with health-care professionals,” the researcher wrote. The other author of the study is Esther Olsen, MHA, a social science researcher at Stanford Health Policy. Margaret Nikolov, PhD, senior manager of quantitative analysis at CERC, assisted with data analysis.

According to a 2024 study by the Kaiser Family Foundation on employer-sponsored health insurance, 60.4% of people in the United States under age 65—some 164.7 million people—had employment sponsored health insurance in 2023. Four out of five companies use a health-benefits administrator such as UnitedHealth Group, Anthem, Humana, Blue Cross Bue Shield, CVS Health, or Kaiser Permanente.

Singer and her colleagues found that of the companies that used a benefits administrator in their study, 60.8% received an annual report on the performance of their health plan that emphasized health spending information at a much higher rate than user experience information, such as demographics, income, gender and race/ethnicity.

Only an average of 19.5% of the reports from those large benefits administrators tracked enrollee demographics and user experience information such as how often employees delayed filling a prescription, visiting a doctor, or having a medical procedure because of an insurance administration’s actions.

“Interestingly,” the researchers wrote, “although 54.8% of companies said that member satisfaction was an extremely important criterion in their company’s choice of a health benefits administrator, only 17.2% of the companies said that they obtained information on measures of employee satisfaction with their health benefits administrator as part of their annual reports."