Published on: July 8, 2025 at 3:53 pm
Most employers in the U.S. manage almost nothing about benefits administration, leading to significant employee frustration.
Academy of Management Scholar Jeffrey Pfeffer of Stanford University said that third-party administrators are vendors and, as such, must be subject to oversight of the employers who hire them, just as companies vet and monitor, for example, a steel vendor or software service provider.
“If I were paying for services from you and you were providing a crappy service, I would figure out a way to either get a different vendor or do it myself,” Pfeffer said, noting that some large organizations are self-insured. “In this case, the responsibility lies with the employers.
“Approximately 80% of working-age people in the U.S. get their healthcare paid for through insurance provided by their employer—the employers are paying for these benefits that are not actually being delivered in a very efficient way, if at all,” he said. “If the employer said to United Healthcare and Anthem and the Blues and everybody else, ‘You need to do a better job, or we are going to basically get rid of you,’ they would do a better job.
“These are vendors, and the anger directed at health insurers needs to be redirected, if you are an employee getting your healthcare through benefits provided by your employer, to the people overseeing benefits and human resources.”
Pfeffer said that when employers begin to hold their vendors accountable for things other than spending—such as denied claims and services—the health insurance industry will respond accordingly. Meanwhile, he predicts that employers will increasingly confront class-action lawsuits based on their failure to fulfill their responsibilities under the Employee Retirement Income Security Act (ERISA).
“In few cases are they doing their duty to their employees,” Pfeffer said.
