How alternative are 'alternative' health plans, really?

Sponsored by

Paid content. Views are the author’s own.

Back in January, I predicted (as did others) that 2026 would be the year of alternative plan design. Amid rising costs and consumer frustration with traditional insurance, it seemed inevitable that employers and employees would gravitate toward “alternative” plans pledging affordability, cost transparency, and simplicity — often powered by AI.

The prediction has mostly panned out. More than two-thirds of employers now offer an alternative plan or are considering adding one, with copay-only or dynamic copay plans driving much of the growth.

Alternative plans are suddenly mainstream, yet many large employers remain hesitant. When I talk to senior benefits leaders, I hear two themes: 1) their cost trend is unsustainable, and 2) they’re worried about untested models, unrealistic savings projections, and disruption for employees.

These competing concerns can paralyze plan sponsors. They know they need to overhaul their approach, but incumbents with legacy businesses to protect — including the carriers that own the largest “alternative plans” — have downplayed the need for change while playing up the risk of disruption.

Here’s what this looks like: I was recently at a meeting convened by a Fortune 50 employer that wanted to hear recommendations from its partners on innovative solutions to bring down costs. Sitting around the table were teams from a national carrier, a pharmacy benefits manager (PBM), and a third-party administrator (TPA).

I won’t detail the discussion, other than to say there was a lot of talk about administrative controls and healthcare by subtraction, and very little about how the partners might come together in new ways on behalf of our mutual client. As we were walking out, a colleague of mine — a former benefits consultant — remarked that the same meeting could have taken place 10 years ago.

This dynamic helps explain why most alternative plans amount to little more than a better “shopping” experience wrapped in an AI-first app. The packaging is new, and the plan names are definitely cuter, but the same-old networks and misaligned incentives remain.

A quick note from Chrissy about our upcoming webinars: Please come join me as I chat live with senior health-tech operators about the real-world problems we’re all trying to solve—starting with Owen and the question at the heart of this piece: what would actually make a health plan an alternative?

NOVEMBER 3 · 1:30 PM ET Is It Finally the Moment for Alternative Plan Design? Christina Farr joins Owen Tripp of Included Health, Fay Rotenberg of Firefly Health and former Walmart SVP of Total Rewards Adam Stavisky on what alternative plan design actually means in practice. REGISTER →

ALSO COMING UP

OCTOBER 8 · 12:30 PM ET Why Are Hospitals Hiring Chief AI Officers? Christina Farr joins Ashley Beecy of Sutter Health, Aaron Miri of Baptist Health and Matt Sakumoto of Nabla to discuss AI leadership, governance and vendor evaluation. REGISTER →

View all Sessions →