A St. Louis company has found a way to help other local businesses save on one of the largest expenses for many firms: the cost of providing health care to employees.
The U.S. spends trillions of dollars on health care every year, with that figure growing. In 2022, health spending in the country rose to $4.5 trillion — $13,439 per capita — according to the American Medical Association.
“It’s not sustainable,” said Adam Berkowitz, founder and president of Simpara, a St. Louis-based benefits consulting firm.
Typically, businesses provide health insurance to their employees with a plan through a large insurance company like UnitedHealthcare, Aetna or others. Then when an employee goes to the doctor, has a procedure or visits the pharmacy, the insurance plan pays a portion of the cost and the employee is responsible for the rest through a copay, coinsurance or deductible.
These were the kinds of plans Berkowitz worked with for almost a decade at another firm before starting Simpara, he said. Year-over-year, Berkowitz said he saw the cost for health insurance rise through higher deductibles, payroll contributions, copays and premiums.
“The harsh reality is that employees have been kind of the brunt of all this collateral damage,” Berkowitz said. “What ends up happening is people delay care until it becomes a big problem, and then they’re facing these big bills.”
Justin Woodard, owner and CEO of Woodard Cleaning and Restoration, saw this happen with his own employees when they still used a traditional health plan.
“We were finding our employees weren’t choosing to go get care because they couldn’t afford it,” he said.
And he was frustrated talking with brokers of those health plans when they quoted cost increases around 40% when renewing, Woodard said.
“We didn’t have good transparency about why the costs were going up so much,” he said. “We would try to modify the plan, which is code for removing benefits or increasing the costs to the employees to figure out how we could get to a number that the business would be satisfied with.”
But now Woodard said many of his employees seek out care since they switched from a traditional health plan to one brokered by Simpara about five years ago. The alternative plan didn’t drastically cut the $1 million to $2 million the company was spending on health care, but it did offer zero cost to his employees at the point of care, he said.
“The year we switched, we were looking at two numbers that were about the same,” Woodard said. “We’re like, ‘You’re saying if we do this plan over here, we can offer a $0 deductible to our people, they could get more care, and that still wouldn’t increase the cost?’”
It’s possible by brokering direct contracts between employers and different health care providers, which is what his company has been doing for eight years, Berkowitz said.
“In short, cutting out the insurance companies and PPO networks that we’re used to in exchange for transparent and fair prices,” he said.
With this approach, companies can offer health care options that don’t cost their employees anything to access, as long as they visit the doctors or facilities that the company has a direct contract with, Berkowitz added.
“When you choose certain providers, then you’re not going to pay anything out of pocket,” he said. “You can still choose to go wherever you want to, it’s still covered, but you’re going to face a deductible and a copay, just like you were before.”
Once the company switched, Woodard said he started hearing from employees who were surprised that they could access health care for free.
“There was a lack of belief until there was actually starting to be some utilization and they weren’t being charged anything,” he said.
And the company could respond to employees’ needs by adding contracts for other kinds of care throughout the year, like networks for chiropractic, mental health and physical therapy network, Woodard added.
“Those three benefits are now available to all of the people in the plan for zero cost,” he said. “We’ve had people say, ‘I’ve never had access to those before, where I could afford it.’”
Brokering direct contracts between companies and health care providers upends layers of the U.S. health care system that’s gotten good at extracting money, said Justin Leader, president and CEO of BenefitsDNA, a health and welfare consulting firm that works to improve health access and affordability.
“We don’t limit what can be reasonably charged for any health care service,” he said. “Even though the government has implemented laws that are trying to force the issue of transparency, the vendors have essentially turned their nose up at those requirements.”
The Trump administration implemented price transparency requirements for hospitals, for example, but Leader said only about 35% of hospitals are compliant. Health care costs are still generally opaque, making it harder for individuals to find affordable care, he added.
“They don't have the tools to be a good consumer,” he said. “They get whacked with a big bill. This is why people are avoiding care.”
Recent surveys have found many Americans don’t have the savings to cover an unexpected expense of $1,000.
“The average deductible nationally is $2,000, so everybody’s walking around literally like one broken bone away from bankruptcy,” Leader said.
