Unpacking the Healthcare Cost Problem

The assumption that higher cost equals higher quality is, in healthcare, frequently wrong. That assumption underpins decades of failed reform, and it is the reason most employers are still managing a system that bills them more for worse outcomes.

Kevin Fyock, Innovation Lead for AI and Health Solutions at Aon, and Kevin Smith, US Health Large Market Leader at Aon, trace where the assumption fails first. The price tag on a procedure or a provider tells employers almost nothing about the outcome they will get for it. In some categories, the relationship runs in the opposite direction. Higher-cost providers produce worse outcomes more often than the market assumes.

Healthcare costs are projected to rise more than 9% in 2025, and for many employers, that increase is no longer just a line item. It is starting to compress salaries, crowd out other benefits investments, and push the total rewards budget toward a breaking point. Many members still lack coordinated primary care. Value-based care adoption remains limited. The average large employer now manages 16 or more point solutions, a near-majority of which generate no positive ROI.

Closing the gap between price and quality is no longer a strategic project that can wait. It is the central work. Predictive analytics and AI tools capable of identifying high-cost claimants earlier, improving network steerage, and measuring program effectiveness are available today. The employers who treat affordability as an urgent structural problem, rather than a recurring budget conversation, are the ones positioned to protect both their healthcare spend and their ability to compete for talent.

Hear the categories where higher cost most reliably buys worse care, and the AI steerage tools Fyock and Smith expect to dominate by 2027. Full episode on Margin of Care.

In this debut episode of Margin of Care, Kirk Czonstka is joined by Kevin Smith and Kevin Fyock to discuss the mounting pressure on employer-sponsored health benefits and what it will take to turn the tide. From unpacking what's really behind the 9%+ medical trend to examining why traditional cost-shifting strategies are failing, this conversation sets the stage for the entire season. Kevin and Kevin bring a consultant's perspective on what employers and advisors are up against, and why the old playbook simply isn't working anymore.