Out of the Black Box: Using Data to Finally Control Health Plan Costs

6-minute read

For years, employers have been stuck playing defense when it comes to healthcare spending. Renewals arrive with another double-digit increase, and the only options seem to be: pay more, cut benefits, or shift costs onto employees. It's a frustrating cycle — and one that’s increasingly out of step with how forward-thinking companies operate in every other area of their business.

No CFO would accept a financial report that only shows last year’s expenses with no line-item detail. No COO would run operations without visibility into inefficiencies. So why do so many employers still manage their health plans in the dark?

The answer lies in how traditional insurance works — and what’s possible when you step outside it.

The Black Box of Fully Insured Plans

In a fully insured model, employers pay fixed monthly premiums to a carrier. In return, the carrier pays claims and provides an end-of-year report with high-level summaries. But here’s the problem: those summaries rarely provide enough detail to identify what’s driving costs or how to fix them. You might learn that pharmacy expenses are rising, but not which medications are pushing the trend. You might see a spike in ER visits, but not who’s going, why, or what could have prevented it.

This lack of transparency forces employers to make decisions based on averages and assumptions — not on data. And when healthcare represents one of your largest operating expenses, flying blind is no longer acceptable.

With a self-funded health plan, the game changes. Employers pay for actual claims, not projected ones, and — more importantly — they gain access to the underlying data. They now have a data-driven health plan.

Also read: Negotiated Pricing: A Smarter Way to Pay for Healthcare

But let’s be clear: raw data alone isn’t enough. Spreadsheets full of claims codes won’t help most employers make better decisions. What’s needed is insight — the ability to turn that data into a clear, actionable understanding of what’s really going on.

That’s where the right partners come in.

At The Mahoney Group, we work with data analytics platforms and health intelligence partners that transform noise into narrative. We help employers see, for example:

• Which conditions are driving the most high-cost claims

• Where preventive care is lacking and avoidable ER visits are rising

• Whether employees are filling prescriptions as prescribed — or skipping them

• Where specific vendors or benefit design features are failing to deliver value

Armed with this knowledge, employers can pivot from reacting to rising costs to actively reducing them — without cutting benefits or sacrificing employee satisfaction.

Insight in Action

Here’s what this can look like in practice in a data-driven health plan:

Let’s say your analytics reveal that a small group of employees with complex cancer diagnoses is driving a disproportionate share of your health plan spend. A deeper dive shows these individuals are struggling with medication adherence, lack consistent access to oncology specialists, and are frequently ending up in the ER for complications that could have been managed more effectively upstream.

With this insight, you can:

Connect patients to Centers of Excellence that specialize in complex cancers, offering multidisciplinary teams and evidence-based treatment protocols.

Deploy predictive modeling to identify rising-risk employees earlier in the care journey and anticipate future cost drivers.

The result? Better care coordination, fewer avoidable hospitalizations, improved patient outcomes — and a more sustainable health plan.

Also read: A Fresh Push for Cash-Pay Healthcare

Or consider pharmacy benefits. Employers using transparent PBMs often combine claims data with drug utilization reviews to flag high-cost drugs with lower-cost therapeutic alternatives — then build in incentives or direct engagement to guide employees toward smarter choices.

This isn’t theory. It’s what happens when data stops being a black box and becomes a strategic asset.

Better Conversations, Better Decisions

One of the underappreciated benefits of data-driven health plans is how they change the internal dialogue.

Instead of going into renewal meetings bracing for impact, HR and finance leaders can sit down with clear dashboards that show exactly where the money is going and what’s working — or not — within the plan design. That clarity leads to better budgeting, more purposeful benefit strategies, and stronger alignment between leadership and employees.

It also shifts the advisor relationship. You’re not just relying on your broker to negotiate rate caps — you’re working with someone who can interpret your data, identify opportunities, and help you make confident, cost-saving decisions backed by evidence.

A Smarter Way Forward

Healthcare will never be cheap. But it can be smarter. And for employers tired of runaway costs and vague answers, using data-driven insights to guide plan decisions is a powerful first step.

The old model was built to keep you in the dark. It’s time to turn on the lights — and take control of your plan, your spending, and your employees’ health.

Also read: Transforming Your Company Health Plan: Proven Solutions for Cost Control and Better Care

The Mahoney Group, based in Chandler, Ariz., is one of the largest independent insurance and employee benefits brokerages in the U.S. For more information, https://www.mahoneygroup.com/ngungor/ or call 520-318-6882.

This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.