“Cheaper” Health Insurance Costs You More in the Long Run
We all love a good deal. Whether it’s finding a great hotel at half price or snagging a business-class upgrade at the last minute, getting value for money just feels good. But when it comes to health insurance, the cheapest option on paper can end up costing far more in the long run — both in direct costs and hidden consequences.
The Hidden Costs of Low-Priced Health Insurance
1) Massive Renewal Increases
Many organizations fall into the trap of choosing an insurer based on the lowest Year 1 premium, only to face double-digit rate hikes at renewal. According to One World Cover’s 2025 Medical Trend Report, medical inflation is expected to hit 10.1% in Asia and 9.3% globally— but many companies see much higher increases because their insurer underpriced their policy to win the initial bid.
When rates are artificially low, insurers must raise prices aggressively in Year 2 or 3 to make up for unsustainable underwriting. This leads to budget shocks, rushed decision-making, and often, another disruptive switch to a new insurer.
📈Want to see how medical inflation is trending? Check out One World Cover’s latest 2025 Medical Trend Report here.
2)More Costly Claims (and No Transparency)
A low-cost insurance plan might look great — until you realize you have no visibility into how claims are being processed. Without access to real-time claims data, HR and finance teams can’t track spending trends, identify cost-saving opportunities, or negotiate fair renewals based on actual claims performance.
Many businesses end up blindly accepting renewal increases with little justification—leading to an unchecked cycle of cost escalation. Worse, a lack of claims transparency can mask billing errors, duplicate charges, or excessive medical spending that could have been avoided.
Real-time claims tracking can save organizations millions – click here to know more.
3) Lower Employee Satisfaction, Higher Turnover
A health insurance plan is only as good as its usability. Some low-cost options rely on narrow provider networks, slow claims reimbursement, or frustrating customer service, all of which can erode employee trust.
A 2023 survey by a global consulting firm found that 78% of employees consider health benefits a key factor in job satisfaction — and 47% said poor benefits would push them to consider a new job. Companies that choose cost over quality risk losing top talent and creating unnecessary headaches for HR.
Price is what you pay. Value is what you get.
Warren Buffett
A Smarter Approach: Balancing Cost & Value
Instead of choosing a provider based on the lowest upfront price, companies should look at the total cost of ownership over multiple years. Sustainable pricing, access to transparent claims data, and proactive cost control measures lead to lower costs over time and a better experience for staff.
Strategies for long-term cost control
✅ Demand claims transparency – Monthly claims data helps prevent unnecessary increases.
✅ Negotiate fair renewals – Data-backed pricing ensures you don’t overpay.
✅ Consider cost-saving benefit design changes – Small plan tweaks can reduce premiums while keeping coverage strong.
✅ Prioritize employee experience – Happy staff means lower turnover and fewer HR headaches.
Want to know if your current plan is actually cost-effective? Get in touch below.
Michael Pennington, Customer Experience Director, One World Cover – [email protected]
