In such cases, the coalition might be able to negotiate lower fees than an insurance company. In instances where a coalition nego-tiates similar or somewhat higher provider fees, the cost to member funds may still be less than the cost from an insurer because coalitions pass fee reductions along to members. In most cases, multiemployer coalitions charge minimal annual or per participant membership fees to cover their operating costs. Operating costs are often kept low by use of volunteers. Savings from reduced fees flow directly to fund members.
Insurance companies can wield considerable clout when negotiating with providers for lower fees.
However, the extent to which reduced fees are reflected in lower premiums for a fund purchasing health insurance depends on a number of factors. An insurance company has a stream of profits and reserves to maintain and may also have stockholder interests to serve. In addition, an insurance company may provide services a coalition does not. The additional services come with a price and funds need to determine whether the price is worth the service. Coalitions and insurance companies negotiate and weigh multiple factors other than price when contracting for health care services.