New Federal Rules Empower Employers to Reverse Runaway Health Premiums

 Rapidly rising health insurance premiums are eroding business competitiveness and worker pay.

According to a new KFF report, the average annual employer-sponsored family health insurance premium is now $28,303, the price of a new base-model car. Health plan costs are rising at their fastest pace in decades, with some employers facing increases of 20% to 38% for next year.

Two new federal transparency rules empower employers to reduce these outrageous expenditures. The first, finalized last week by the Department of Labor, affects pharmacy benefit managers, which administer prescription drug benefits and operate between health plans, drugmakers, and pharmacies.

Under the new rule, PBMs must disclose their direct and indirect compensation arrangements and conflicts of interest so health plans can provide basic oversight, discover hidden costs, and reduce their prescription drug expenditures. DOL expects the rule to save as much as $22 billion.

Prescription drugs are one of the biggest drivers of employer health plan cost increases. They are projected to account for 27% of employer healthcare spending in 2027. Hidden PBM compensation arrangements are a major reason why.

For example, PBMs negotiate massive rebates from drugmakers, creating a financial incentive to prioritize the most lucrative medications in health plans over the most cost-effective ones. This dynamic is a major reason insulin, a century-old, lifesaving medication that millions of Americans depend on, remains so expensive.

PBMs also engage in extreme spread pricing, charging health plans far more than they reimburse pharmacies, pocketing the difference. A January 2025 Federal Trade Commission report estimates that the big three PBMs, which control 80% of the market, generated $1.4 billion in spread-pricing income on specialty generic drugs between 2017 and 2021.

As a result of such self-dealing arrangements, employer health plans can pay ten times more for medications than the cash price.

By requiring PBMs to disclose their compensation arrangements, including rebates, spreads, and profiteering, the rule gives health plans insight into how to cut waste and negotiate less expensive prescription drug benefits.  

Another new federal transparency rule lets employers reduce costs in the rest of their health plans. It strengthens the existing federal Transparency in Coverage rule, which requires health insurers to publish their negotiated rates by plan.

The new rule requires insurance industry executives to attest to the validity of their TiC published prices, which multiple analyses have found to be inaccurate under the status quo.

It also eliminates millions of implausible TiC provider-price combinations -- think maternity services at a podiatrist's office -- that have clogged price files to the point where they are generally too large and unwieldy to analyze. These faux disclosures obscure real prices in the name of publishing them.

By making TiC files accountable and accessible, the new rule makes health insurance price transparency a reality, allowing employers to reduce costs through choice and competition. Employers can analyze TiC prices to benchmark what they pay, identify overpriced services, evaluate their networks, and negotiate better contracts with insurers and administrators.

With this real price data, employers can also better maintain health plan billing and payment integrity, ensuring bills, payments, and prices match. As a result, insurance intermediaries will have a much harder time charging health plans – i.e., businesses and workers -- twice what they pay providers.

Such behind-the-scenes spread pricing and self-dealing help explain why eight of the top 20 companies on the Fortune 500 are health insurers, PBMs, and middlemen.

Together, these transparency rules allow employer health plans to stop the overpayments, overcharges, and profiteering that inflate premiums year after year. Lower health plan costs will make businesses more productive and workers higher paid, boosting the sluggish economy.

Jordan Bruneau is director of Great Lakes Policy Institute.

https://www.realclearhealth.com/articles/2026/11/05/new_federal_rules_empower_employers_to_reverse_runaway_health_premiums_1215335.html