Veriton Insurance Group

Modern Insurance Myths — Part 6
“Other countries have cheaper drugs because their system is better.”

You hear it all the time:
“Why is this $500 here and $50 in Canada?”
“Europe gets the same drug for a fraction of the cost.”

So the conclusion becomes:
“Their system is better. Ours is broken.”

However, that’s not the full picture. Other countries don’t get cheaper drugs because they’re more efficient. They get them because they have leverage—and they’re willing to use it. In places like the UK, Canada, and much of Europe:

The government negotiates on behalf of everyone
They set strict pricing thresholds

And they can say:
“We’ll cover this… but only at this price.”

If the drug company doesn’t agree?
They don’t just pay more.

They can:
Delay access
Limit who qualifies
Or refuse to cover it altogether if it doesn’t meet their criteria

That’s how prices stay low. Now compare that to the U.S.
We don’t have one buyer—we have:
Dozens of insurance carriers
PBMs
Employers
Government programs

It’s fragmented. So instead of one strong negotiation…we get a bunch of smaller ones.

Here’s what most people miss:
Drug companies don’t charge more in the U.S. randomly.
They charge more here because this is the one market that struggles to say no. Other countries control costs by tightening coverage decisions.
The U.S. allows broader availability, but pushes the cost burden onto employers and individuals.

So why don’t we just copy Europe?
We could. But it would mean accepting trade-offs like:
Slower access to new drugs
More restrictions on who qualifies
More “no” decisions from the system

Other countries accept that, while historically, the U.S. hasn’t. Other countries lower costs by controlling access. The U.S. expands access…but at a much higher price.

So no, it’s not that their system is “better.” They’ve just made a different trade-off.

Modern Insurance Myths — Part 3

“Insurance companies are making billions and not paying for anything.”

This one gets thrown around a lot. And I get it, when you see companies pulling in hundreds of billions in revenue, it’s easy to assume they’re taking a massive cut off the top.

But here’s the uncomfortable truth:
They’re really not.
When you actually look at the financials:
• The insurance product itself often runs on margins around 0%–3%
• Even at the total company level, most major carriers land around 1%–4%

That’s it.

So if they’re not taking huge profits, why does healthcare feel so expensive? Because insurance companies don’t set the prices.
Hospitals and provider groups do.

They:
• Set the rates
• Negotiate reimbursements
• Control the cost of care that premiums are built on

And even though many hospitals report low operating margins, they still:
• Generate cash flow over time
• Expand aggressively
• Build new facilities and acquire competitors

So the money is clearly going somewhere. Here’s the part most people don’t want to hear:
Insurance companies are the most visible part of the system, but they’re not the part driving the majority of the cost.
Costs go up → claims go up → premiums go up.
That’s how the system works.

So when premiums jump 15%…
it’s not because an insurance company suddenly decided to get greedy. It’s because the underlying cost of care increased.

People can tell something’s broken.
They’re just blaming the easiest target instead of the right one.

We hope everyone has a great and safe Thanksgiving.