The Hidden Complexity of Self-Funded Plan Design
In October 2024, McKinsey & Company published a revealing article titled Reimagining US employer health benefits with innovative plan designs. It opened with a bold, if uncomfortable, insight:
85% of employers say their employees are overwhelmed by their health benefits.
Not confused. Not mildly frustrated. Overwhelmed.
For all the innovation and customization in the self-funded world—tiered networks, condition-specific care management, concierge services, digital navigation tools—the average employee still feels lost. The result? Low utilization of high-impact programs, poor outcomes, and wasted investment.
Complexity Is the New Cost Driver
The traditional focus in benefits has been on managing unit cost—negotiating discounts, shifting premiums, or tweaking formularies. But McKinsey’s research reframes the challenge: complexity itself is driving disengagement and poor value.
Employees don’t just need “more” or “better” benefits. They need clarity.
The article highlights a few striking problems:
Multiple point solutions with no integration
Disjointed experiences across medical, pharmacy, mental health, and wellness
Fragmented communications from HR, vendors, and platforms
Lack of personalization in tools meant to simplify choice
This isn’t just a usability problem. It’s a business problem. When employees don't engage with their benefits—because they don't understand them—employers don’t get the return on investment those programs are supposed to deliver.
Navigating the Labyrinth
The irony is that many employers added complexity with good intent—to offer more choice, more support, and more innovation. But now, it’s clear: we’ve built a maze, not a map.
To reorient the system, McKinsey recommends three strategies:
Integrated Navigation Platforms
Not just digital front doors, but tools that unify clinical, financial, and behavioral health needs in one seamless experience.Personalized Guidance
Use data to proactively steer employees toward the right care, not just reactively present options.Plan Design Simplification
Reduce the number of plan tiers, copay structures, and disconnected services—especially if they’re not delivering measurable value.
In short: give people fewer decisions to make, and more confidence in making them.
What This Means for Brokers, HR, and Plan Sponsors
If you're in the business of helping employers build or manage health plans, this is your cue to stop selling complexity as customization.
Audit the current member journey. Is it clear, cohesive, and easy to navigate?
Evaluate point solution sprawl. Are vendors working together—or creating more silos?
Push vendors to share data. Integration isn’t a feature. It’s a requirement.
Because ultimately, no amount of clinical excellence matters if the people you’re trying to help can’t figure out how to access it.
Final Thought
We didn't mean to make healthcare this confusing. But we did. Now it's on us to simplify it.
As McKinsey put it, “Reimagining employer health benefits will require a shift from point solutions to holistic ecosystems.” The maze won’t solve itself. But with smarter design, clearer navigation, and a relentless focus on the end user, we can start building a system that works—for everyone.
