Open enrollment is healthcare’s most expensive lie

We waste billions on a shell game, creating the illusion of choice

- NEAL K. SHAH GUEST CONTRIBUTOR

I'M OLD ENOUGH to remember when there was no annual open enrollment. You got health insurance through your employer, and unless you changed jobs or had a major life event, you kept the same plan. Year after year. Simple. Stable. Sane.

Today, we've built a multi-billion-dollar theater production called “open enrollment” that costs more to stage than many small countries spend on their entire healthcare systems. American healthcare wastes approximately $248 billion annually on excess administrative costs, and open enrollment sits at the heart of this hemorrhage. Broker commissions, marketing materials, comparison portals, HR staff hours and the entire infrastructure of manufactured “choice” siphons money that could pay for nurses, doctors and actual patient care.

The promise was competition. Give Americans annual choices between plans, the thinking went, and market forces would drive quality up and costs down. But here’s what actually happened: We created a system in which insurers pay brokers a commission for the employers they sign up — usually a healthy 3% to 6% of the total premium, potentially $50,000 a year for a midsize company — incentivizing them to sell higher-cost plans regardless of quality. We built elaborate comparison tools that let consumers agonize over premiums and deductibles while hiding the only number that actually matters: denial rates.