Q&A . . . With Kevin Casey

Q: As employers prepare for their next benefit-plan renewals, what kinds of rate increases are small and mid-size Kansas City companies encountering, and how does that compare with the past two or three years?
A: The 2026/2027 benefit renewals have been the most volatile I have seen in my 25 years in the industry. We have a couple of groups receiving single digit renewals but many of the groups are receiving between 15 percent and 60 percent renewals. If there is known risk within the membership of the plan the carriers are not willing to negotiate much if anything at all. National benchmark increases are nearing 10 percent on average, but smaller employers experience volatility well beyond average increases.

Q: What is driving those increases most heavily today—hospital and outpatient care, prescription drugs, greater utilization, chronic conditions or something else—and which pressures are accelerating fastest?
A: Prescription drugs and acute conditions are driving much of the increases within each plan. As you change your plan structure there is significant opportunity to impact the prescription drug cost on your plan. But we are seeing more and more acute conditions pop up with cancer being at the top of the list. The increased frequency and severity of high-cost claims, coupled with the exploding prescription drug market, has led to a hardening of the stop-loss and fully insured market from the carrier side. Sun Life’s 2025 stop-loss analysis found that million-dollar claims increased 29 percent in one year and 61 percent over four years; cancer was its most frequent and costly high-claim category, and eight of the 10 highest-cost drugs were primarily cancer treatments. That combination explains why carriers are pricing more cautiously and negotiating less aggressively when they can identify known risk.

Q: Are employers seeing materially different renewal results in Kansas and Missouri? If so, how much of the difference reflects provider prices and market concentration rather than workforce demographics or utilization?
A: I do not see the state line impacting renewals across the Kansas City metro area. As we expand outside of the Metro area we do run into dramatic increases as we move towards the more rural areas and cities outside the Metro area. I believe this is impacted by lower premiums in the past for groups meeting the extreme volatility of the acute conditions and pharmacy spend. Just today I received an email about a new $20,000 per month medication that a member was soon starting with no other alternatives. This is for a 100-employee enrolled company, which equates to about 20 percent of their premium. The renewal will definitely include this 20 percent cost increase.

Q: At what point do higher deductibles, employee premiums and other cost-sharing measures become counterproductive by discouraging employees from seeking necessary care or weakening the company’s ability to recruit and retain talent?
A: I talk about this a lot as most every American is struggling right now to pay for their rent, groceries, gas, etc.  At every open enrollment meeting we encourage everyone to take advantage of the no cost preventive care on their major medical plan. That is not only an annual physical and blood work but also includes age-appropriate testing for conditions like cancer. In addition, we encourage plan designs that removes the co-pay between them and their primary care physician. Many of my groups offer $0 primary care visits to try and enhance that relationship and not have any barriers between a member and their physician.

Q: Which cost-control strategies are producing measurable savings without impairing access or quality—centers of excellence, direct contracting, narrower networks, reference-based pricing, primary-care models or steering patients toward lower-cost sites? What results have employers actually achieved?
A: The biggest barrier is often an employer’s understandable reluctance to change a benefit employees have used for many years. An experienced benefits consultant can reduce that uncertainty by explaining the trade-offs, managing implementation and communicating why the change benefits both the company and its employees. Many times narrower networks are the best solution if you are in a difficult renewal situation. My recommendation would be to not put yourself in that difficult renewal situation and instead implement changes early to create the most efficient program now before the alarms are all going off. Early implementation also allows for a more calculated approach in communication with the employees which is the biggest piece of the puzzle.

Q: Conversely, which widely promoted cost-saving tactics have proved inefficient, difficult to administer or disappointing in practice? Why did they fail to produce the expected return?
A: Level-funded products are technically self-funded arrangements that package an expected claims fund, administrative expenses and stop-loss coverage into a predictable monthly payment. My concern is that they can look and feel like fully insured coverage while giving the employer less upside than the sales presentation may suggest. Underwriting, fixed fees, stop-loss pricing and surplus-refund provisions can allow much of the economic value to remain with the carrier or administrator.

Q: Federal hospital data show that outpatient services represent a growing share of hospital activity. Where do employers have the greatest opportunity to reduce costs by directing care to independent clinics, ambulatory surgery centers, urgent-care facilities or other lower-cost settings—and how can they encourage employees to use them?
A: The “secret sauce” is connecting employees with providers who demonstrate both strong outcomes and reasonable total cost—not simply choosing the least expensive facility or the highest-priced physician. We use programs that help employees identify those providers and offer a financial incentive to use them. Properly designed centers of excellence and bundled-payment programs can align quality, predictable pricing and lower employee cost sharing.

Q: Prescription costs, especially specialty drugs, can overwhelm savings elsewhere in a benefit plan. What practical steps are working for smaller employers that lack the purchasing power and administrative resources of major corporations?
A: The easiest way for small and mid-size employers to impact their pharmacy spend is to move away from the large carrier options in the market. Many times these sized companies do not want to take on the risk of doing this alone. Thus we have seen more and more employers, even at smaller employee counts, starting to look into the captive market. A captive allows employers to combine purchasing power, share a defined layer of risk and access pharmacy and cost-management options that may otherwise be difficult for a smaller organization to obtain. Captives do not eliminate risk, but they can make an unbundled strategy more manageable. I have moved more groups to captives in the last year than at any point in my career.

Q: When do alternatives such as level funding, self-funding, group captives or other shared-risk arrangements become realistic for a small or mid-size employer? What financial strength, work-force size and tolerance for risk should a company have before considering them?
A: This answer has really expanded in the last few years. From a level-funded standpoint, there are carriers writing those cases under 5 lives now. But again I will stress that there is really no financial incentive to be level-funded despite what may be said about “getting a premium refund.” As far as all of the other options mentioned above, I would say that employers with 25 or more employees have a lot of options. Each and every employer is different and working with a benefits “consultant” and not a broker is the key. If you are serious about controlling your health care expenses long-term, working with a consultant that has implemented every one of these opportunities above and can identify the opportunity for your company is the key.

Q: If a Kansas City business owner could make only one or two benefit-plan changes for the coming year, which would offer the best combination of cost control, employee acceptance and long-term value—and what should the employer measure to determine whether those changes worked?
A: Each employer’s risk profile is different, so it is hard to just say change these couple things. But to answer the question, you first need to be working with a benefits consultant who understands these markets and has the experience to give you an honest evaluation of your current situation. Just marketing your coverage each year looking for a better price is not a strategy. The second piece I would look for is how are my employees being communicated with. Working with a consultant who has made changes before and knows how to communicate those changes to the employees is maybe the biggest piece to the puzzle. Employee acceptance into the direction of the plan will be the single biggest piece of making a change that can really impact the future cost of your employee benefits program. The second priority is employee communication and navigation. A technically sound strategy can fail if employees do not understand what is changing, why it is changing or how to use the new program. Employee acceptance is often the most important factor in whether a plan change produces lasting results.