Rethinking the Economics of Care

American healthcare costs keep rising, not because the system is broken in mysterious ways, but because of a structural feature hiding in plain sight. Healthcare is the only sector in the economy where consumers have no direct connection to the cost of the product. When a $25 copay looks the same whether the underlying claim is $200 or $1,000, there is no market pressure pushing prices down. Basic economics takes it from there.

Chris Hogan, principal at Benefit Commerce Group, spent 20 years on the carrier side before co-founding the firm with the explicit goal of reverse-engineering that knowledge to save employers money instead. The through line is clear. The industry has spent decades chasing cheaper rates rather than improving the underlying risk, which gets the problem exactly backwards. Workers' compensation figured this out long ago. Health insurance largely has not.

Provider incentives make the whole picture worse. Fee-for-service medicine rewards volume, full beds, and full waiting rooms, not outcomes. Market forces are starting to correct this at the margins. Health systems have begun approaching Garner to ask why they are losing patients and what they can do to improve their standing. That is the competitive pressure the system needs more of, and it does not require regulatory intervention to work.

For employers, the practical frame is a continuum between two poles: a value-neutral strategy that holds benefits steady and captures the savings, and a budget-neutral strategy that holds spending steady and reinvests those same savings into richer benefits. Cost reduction and employee experience do not have to trade off against each other. One nonprofit client found $3 million over three years. Their CEO's response was to describe what $3 million in community services looks like. That is the version of this work worth doing.

In this Season 2 premiere episode of Margin of Care, Kirk Czonstka sits down with Chris Hogan, a veteran healthcare economist and former advisor to major self-funded employers. Together, they unpack why the economics of employer-sponsored care are fundamentally broken, and what it would actually take to fix them. Chris brings a rare combination of academic rigor and real-world experience to the conversation, challenging conventional wisdom about what drives costs and why value-based care has failed to deliver on its promise.