Category Archives: Employer HR

What Comes After the Health Insurance Tsunami?


Anyone in sales understands the idea of whether you sell pain avoidance or pleasure. The statistics show, and it is my experience, that selling pain avoidance generates better results. In my last business I estimate that 75% of my clients became clients only after they suffered the loss of an important client. We have all heard the story of Blockbuster turning down the opportunity to buy Netflix for $50 million. I believe, regardless of the sales strategy, that most of us do what we do because we want to do something good for people. Selling pain avoidance may be a necessary evil at times though we do so somewhat reluctantly. Dealing with human behavior is part of business.

In my last article I wrote about, “The Health Insurance Tsunami is Coming – and It Will End Employer Health Insurance as We Know It”. The implication is this is bad because a Tsunami can’t be good, right? Well, in reality, I think what replaces the current health insurance system is going to be great. I come to work every day in my business doing as much as I can to make that happen. The tagline for my new company is, “Helping Employees Have a Better Day”. I really don’t think the current health care system does that. My 22-year-old daughter pays what is the equivalent of 90% of her health insurance premium through work for a $5000 deductible. It is not much of a benefit. The current system is very broken and does need to be wiped out.

Many benefits brokers I talk to hope I am wrong about the Tsunami because anyone protecting the current system may be wiped out. I am not hoping people are hurt. I actually think there is the possibility of a new health care system within our grasps that could really help millions of Americans. My preferred message to brokers would be “Let’s get together and fix health insurance to help millions of Americans”. That is really what excites me every day. We can do something great.

So, what is after the Tsunami? Imagine a world where health insurance and health care costs are 20% less than today. Insurance plans are easy to understand. There may be a small copay or deductible of $500 and then everything is 100%. I won’t need a medical insurance dictionary or call center to understand my health insurance or the health care system. My doctor has an incentive to keep me healthy. I get a text message from my doctor if I gain ten pounds and he asks to see me. My health data is collected on my watch or cell phone and proactively tells me what I should be doing to stay healthy. My insurance is mine and only changes when I choose to change it. I have easy access to all my medical information, and I choose who can have it. There are no claim forms. My primary care physician advises me on the best and most affordable prescriptions when needed. New health care innovations are readily available, and I can learn about them on my cell phone. There will be no need to ever negotiate health care costs or worry about balanced bills. And, believe it or not, this is not Medicare-for-All.

What replaced Blockbuster was Netflix. Netflix is better. I don’t have to get into my car and go to a store to rent something and then pay a penalty when I don’t return it on time. Netflix is better than Blockbuster, though many people who were somehow financially tied to Blockbuster may have suffered financial losses. It is an unfortunate by-product of progress.

This could be a benefits broker’s Blockbuster moment, but it doesn’t have to be. There are companies that will thrive because they help solve a major problem in America. My mission is not to help or hurt benefits brokers. The market doesn’t care what I think anyway. However, I have been promoting a health insurance and health care model that I believe can help our whole country. I think the market is ready for this change. The pieces are coming into place. We can be part of the solution, or not. So, let’s do it, because we can!

It’s Time to Turn Health Insurance Around


When employer paid health insurance became a tax-deductible expense in the 1940’s employers jumped in with the idea of providing employees a different type of compensation to attract and retain talent. I would bet they could not have imagined the health insurance world of today where the cost of health insurance significantly impacts profitability and employers are forced to deal with managing the health of their employees. The reaction of the industry insiders over the past 20 or so years, but even more so since the passage of Obamacare, has been to push employers even more into the path of this health care cyclone by having them take on even more risk and responsibility. Many have joined coalitions to perpetuate this misguided trend. I would contend that the reason for skyrocketing costs is the perpetuation of employer-based health insurance promoted by interested industry insiders. I say it is time to turn this trend around. It is time to move the risk and responsibility away from employers and onto where it belongs, which is the health care system and the patients.

I have written in previous articles that the two major financial frauds in the U.S. that are causing financial harm to millions of people are the costs health care and college education. In both cases, third-party payors fund the costs (often temporarily and indirectly) and the insiders have no incentive to stop the cost escalation. In both cases it is the system that drives costs up because there are few built-in incentives to control costs. And even those that try to control costs may be doing so with good intentions, but most continue to support the “system” that is designed to protect the status quo and drive costs up.

In the health insurance business, for the past 25 years we have seen many efforts to control health care cost. From HMO’s to PPO’s, claims management and prescription drug programs, wellness programs, and other incentives to modify employee behavior, have all failed. Over the past few years we have seen the proliferation of efforts to try to control costs by shifting more risk and responsibility to the employers who have often then pushed more risk onto the employee. Smaller and smaller firms have turned to self-funded plans. Deductibles have risen significantly for the employee. Many consultants have been promoting referenced-based pricing policies, that I think are “desperation” only policies. All these programs shift the risk and responsibility towards the employer and employee.

The insurance companies have also been shifting risk. They are using claims experience on smaller groups to adjust pricing when there is no statistically valid reason to do so. They “laser” underwrite, which means if a group comes up with a big claim and can’t move their insurance, they get a big rate increase and are told, “well, you have a large claim”. For self-funded employers they may change the insurance limits for that one claimant. This is not insurance.
Employer-based insurance policies are one-year term policies, meaning rates are adjusted annually for a period of one-year. Most small businesses can’t afford to assume the risk of a large claim and the increased premiums related to that claim, which is why they buy insurance in the first place. A one-year term policy for a group health insurance program is simply a flawed concept. Health insurance needs to be priced over a longer term like other high-risk types of insurance.

There are many benefits consultants pushing employers more into the health risk and responsibility business. They say, “you are in the health insurance business, get over it”. I contend that employers want out. Business owners don’t start businesses to be in the health insurance business. They don’t come to work wanting to control their health care costs. I say it is impossible anyway. There may be some stories of short-term success here and there but for the most part, they don’t want to be doing this and they shouldn’t be. The health of one’s employees should not be the risk or responsibility of an employer. They can care about an employee but not assume the risk. And then they hire an employee whose spouse is pregnant with triplets. As Mark Bertolini, ex-CEO of Aetna, said when asked at Stanford, “how do you create a more educated consumer…so they utilize the system appropriately”. He responded as follows, “trying to educate everybody on how the health care system works and the level of detail isn’t going to work”. The idea that employers and employees can manage health care and health care costs is a far-fetched idea. Ask anyone being rushed to a hospital in the back of an ambulance what they are thinking at that time.

The good news is that there is a whole new health insurance and health care system that is evolving that will turn things in the right direction. One of the catalysts to this change is the recent Executive Order by President Trump that will allow an individual insurance purchase through an employer-sponsored Health Reimbursement Account. This one change will remove the handcuffs from a system that needs to move the risk and responsibility into the right hands from the employer and insurance companies to the consumer and providers of health care. Health care will become more personal and less expensive. Health care will be more about keeping people healthy rather than fixing them after they are ill.

When imagining a new health insurance and health care system one needs to remove today’s version from one’s mind. The new system will be much different from today. Who employees buy their insurance from will be different. No more one-size fits all from employers. The types of plans will be different. No more PPO’s. Imagine no deductibles or copays and no paperwork. No more annual 10% increases in health care costs for employers or employees. Imagine knowing about an emerging health condition before it happens.

The time to change is now. Employers need to rethink the way they view health insurance in their organizations. They need to engage consultants who don’t support the status quo, which is the current system. It is time to turn health care around, so let’s be part of the solution.

A Zombie Movie and the Relationship to Trump’s HRA Changes


Rarely do I watch a Zombie movie and when I do, I don’t look to get lessons in business from the movie. However, one movie did give me a lesson in business and since then it has been a conscious part of my daily work-life. If you read previous articles that I had published on LinkedIn or on my blog at http://www.joemarkland.wordpress.com , you will see a somewhat constant theme which is also the tagline to my blog titled, “Challenging Everyday Thought”. The movie, Word War Z, and its lesson have contributed to my writing. It also has also somewhat prepared me and my business for the changes Trump made to the Health Reimbursement Account (HRA) rules where effective January 1, 2020, an employer can give money to employees on a pre-tax basis to purchase personal health insurance.

To summarize the clip from the movie, it is about threat assessment. The Israeli’s (in the movie), because of constant threats against their nation, developed the concept of the 10th Man. In their threat assessment process, they have a panel of 9 people who look at evidence of a threat and vote as to whether it is a threat of concern and would require action. The job of the 10th Man is to take the opposite position of the vote and try to prove them wrong. In the movie, the Israeli’s were assessing a threat of a virus spreading in a small African village that turned people into Zombie’s. The 9-person panel voted that it wasn’t a threat but the 10th Man convinced the other 9 they were wrong. (You can see the clip below.)

In my own business I play the role of the 10th Man. I don’t have a panel of 9 people assessing threats to my business, but I do read many articles in industry magazines and attend webinars and seminars on the health insurance and health care industries to try and get some idea as to where the business is going. My staff has their share of opinions too. I do this because I need to make sure my business stays relevant. The thing is, I have almost always disagreed with what I was hearing in the mainstream media of the industry. I wrote about this in my article, “Sometimes I Feel Like George Costanza”. The current health care and health insurance system is broken, and I see ways to fix it that everyone is seeming to ignore, that is until now, with these changes by Trump.

As one who looks for potential business threats, I have paid close attention to signs from those who have no interest in protecting the status quo. Those voices are hard to find. I did, somewhat accidentally, come across two instances where I heard very credible people talk about the coming changes in the health insurance and health care markets. One was Mark Bertolini, past CEO of Aetna, who I referenced in my article, The Coming End to Employer-based Health Insurance back in December 2014. (See article link below.) In Mark’s presentation to the Mayo clinic, he drew the picture of a future health care system where employers were no longer in the middle. Individuals would choose their own health insurance.

The other I heard while on a hike one Saturday morning in the summer of 2016 while listening to the Larry Kudlow radio talk show about economic issues. HIs guest was from the Trump administration, and they were talking about health care. The Trump advisor stated that somewhere in the second half of Trump’s first term, or the beginning of the second if he were re-elected, he would propose moving the deduction for health insurance from the employer to the employee. He said that the power of the individual consumer would create a new competitive environment and would be the catalyst needed to drive down health insurance and health care costs. While Trump has not done this though tax law changes yet, the new HRA rules are a start to giving the consumer the power. It just happens that Larry Kudlow is now part of the Trump administration as his Director of the National Economic Council.

I find it amazing that I had never heard any reference to the Bertolini presentation, or the position stated by Trump’s advisor, in any other media source including all the health insurance industry publications or at conferences. When I have written about these changes in the past I have often been chastised, as if I was the one proposing these changes.
After hearing these two positions, I evaluated the threat and took action, which is now my current business. However, these current changes to the HRA rules are just the tip of the iceberg and I am not naïve enough to think I have it all figured out. What I do know is that we are in the first inning of a new game and Trump just started this game. I believe there will be much bigger changes in the next 5 years that will transform health insurance and health care in America forever.

If you listen to the same people over and over, you won’t hear anything new. I think most people tend to seek out others whose opinions mirror their own. However, if you listen closely, you can hear those out there telling a different story. So, become your own 10th Man and either take action, or maybe you will need to watch out for the Zombie’s.

Article References:

You Tube of the World War Z Scene

Sometimes I Feel Like George Costanza

The Coming End to Employer-based Health Insurance

 

Webinar Series – Taking HR to New Heights


WE WILL SHOW HR PROFESSIONALS WHAT IS POSSIBLE

Technology is impacting the HR world no differently than in our personal lives. There are web, mobile applications, and soon to be artificial intelligence and machine learning. Live chat and video conferencing are already commonplace. Yet, for many HR professionals, these capabilities are not realized and appear to be unattainable.

Join us for the first installment of our 2018 ProHCM Webinar Series focused on educating HR professionals about what is possible through current and future technologies in HR, but also provides a plan on how to take action to achieve your goals – that is affordable.

Webinar 1: Taking HR to New Heights

Tuesday, Feb 27th
11:00 am PST / 2:00 pm EST

REGISTER NOW

This webinar will show you what is possible and what new technologies are coming to move HR to New Heights.

We will not only talk about what is possible, we will show you. We do not represent any one technology vendor, so we will highlight multiple vendors with great solutions. You will leave this webinar knowing what is possible.

Webinar 2: Overcoming the Obstacles to Success

Coming in March!

Taking HR to New Heights has its challenges. Some of the obstacles are internal but many are external. Most employers and those causing the problems don’t realize it. In this webinar, we will identify the obstacles and show you how to overcome them.

Webinar 3: Creating an Engaging Employee Experience

Coming in April!

With web and mobile technologies employers are faced with accommodating the new consumer, the employee. The employee experience is a reflection of your brand and culture, so it has to be good. We not only show you what good is, but we will show you how to make it great.

Webinar 4: Redefining Employee Benefits

Coming in May!

Employers are getting bombarded by vendors with new products and services for employees. Wellness, financial wellness, nutrition, college debt repayment, and many more solutions are hitting the market. In this webinar we will give you an overview of the market along with a practical, manageable, and affordable way to introduce new programs to your employees.

 

The Health Care Solution Can Be Found in the Dunkin Donuts Drive-thru


Almost every morning on the way to work I go through the Dunkin Donuts drive-thru and get a large coffee. On an average day there are two or three cars in line. If it is a school day and my timing is off there may be 4-5 cars in line. But every now and then there are 10-15 cars in line. The first time I saw the big line I thought they were short-handed. However, when I pulled up to the drive thru speaker and ordered my large coffee I was asked what kind of free donut I wanted with that. Yes, it was buy a large coffee and get a free donut day. My first thought was that I needed to lose fifteen pounds and don’t need the donut. My second though was that I could not believe how many people changed their morning routine to get a free high calorie food item that costs $1.20 because they purchased a coffee. As a psychology major I came to the simple realization that this is real human behavior in action.

This gets me to what I have always believed about the U.S. health insurance and health care market. I believe that the major obstacle to achieving significantly lower costs are laws and rules that prohibit normal and instinctive human behavior. If we simply unleashed the power of an individual to act in their own self-interest as they do to get a free donut, the entire market would react to meet the demand that this behavior created. Costs would drop like a rock as insurance companies, doctors, hospitals, and drug companies restructured their businesses to accommodate this new buyer. These lower costs would also free-up needed capital to cover those that need a safety net.

Most can’t imagine this new world because their minds are stuck in the current model. The new models would be very different. Maybe insurance products would not be as complex. I often reference how Steve Jobs was a uability fanatic. He cared about the fonts on the cell phone. If the iPhone wasn’t easy nobody would use it. Apply the same logic to health insurance. Would some company design an easy to understand product? I always make fun of a prescription drug plan that I saw that had 12 different ways to get reimbursed for a prescription. Does anyone really understand what a non-formulary non-network drug is?

A few years ago, I read that 87% of employees had one health insurance option through their employer. That may be a little higher today but still a low number. With almost every other product I purchase I have dozens of options. Dunkin Donuts has 20+ donut options. The local ice cream place has 30 flavors and that is just one place. How many different cars can I buy? A buddy of mine owns a vodka business. How many types of vodka or beers are there? Yet with health insurance I have one option and the price is going up 15% every year. Maybe there is a relationship between these two stats.

I read all these articles by brokers and others about working with employers to try and control health care costs. In my opinion, while it is necessary in today’s world, it is all garbage. It is a temporary fix. I know this may be blasphemous to say such things in the world that I travel but I really don’t think employers want to be going to work and worrying about how to control the claims of their employees. I often say that the best way to control costs is to not hire old fat people. The current market does promote that type of discrimination.

The two areas in then U.S. where there is easy access to capital are in health care and college education. These are also the two areas where costs are exceeding inflation by a mile and are the biggest burdens on our society. In health care employers pay a large part of the premium taking the obligation away from the individual. In education the student loan programs give loans in the hundreds of thousands of dollars to young people who have no job, no credit, and have no idea what $150,000 in debt really feels like. The solution to both is to change the incentives to drive down costs. It seems so simple that I really can’t understand what is preventing this from happening. If a free donut can change human behavior in this way then why not try it in health care and education. I bet it would work.

Redefining Employee Benefits


When it comes to the benefits brokering business you get people or companies labeling themselves in many different ways. When I started in the business the common title was a Group Insurance Broker. Some added the label “Consultant”. Over time the term changed to Employee Benefits Advisor or Employee Benefits Consultant. I guess in the end you can call yourself whatever you want but the market really doesn’t care. What an employee values as a “Benefit” to working at some employer is something that is personal to that individual. The consumer or customer, or in this case an employee, will determine for themselves what is a benefit and what is not. Even the employer may be offering “benefits” that their employees don’t value much as a benefit to working there.

I think we are in the middle of a redefinition of what Employee Benefits is. A 23-year-old entering the workforce with a ton of college debt more than likely does not view a health insurance plan with a $3000 deductible as much of a benefit. Most don’t see themselves incurring claims over $3000, and if they did, they don’t have the $3000 in the bank to pay the deductible. My son is that 23-year-old and that is what he and his friends told me when I asked them. Granted, this is not a large sample size.

Mark Bertolini, CEO of Aetna, who has implemented some of the most progressive employee benefits programs for their employees says, their goal is to help employees be “happy, healthy, and economically viable”. Not a bad objective, and I would assume this would help their employees be more productive. I think most people strive to be happy, or at least happier, so helping people be a little happier is a worthy goal.

When a 25-year-old single mother with no money in the bank has her refrigerator break down that is a bad day. When a 40-year-old has their spouse ask for a divorce unexpectedly that is a bad day too. And when your 87-year-old father has dementia and needs to be put in a nursing facility that is a bad day for you and your 89-year-old mother who is slowly losing her partner. These bad days suck the happiness out of most people and this almost always leads to lost productivity at work, at home, or almost at any endeavor. It is hard to stay focused when something else consumes you.

This emerging market demand to help people through their workplace has resulted in a significant amount of capital being invested in new companies providing products and services to fill the need. These solutions include wellness, nutrition and smoking cessation programs, financial fitness, college loan payment support, employee loan programs, help with bad credit, and more. At Aetna, they promote yoga and pay employees to sleep more in additional to many other programs. Aetna claims that these programs have saved them millions of dollars through improved employee productivity and a reduction in sick days. This is certainly a different employee benefits world.

For employers, the idea of providing a benefit to employees should be a good thing. Who doesn’t want healthy, happy, financially viable, and productive employees? For many though, the number one employee benefit, health insurance, has become a necessary evil that still leaves employees with a financial burden. And what employer wants to come to work and worry about managing the health claims of their employees to keep down costs and maintain profitability? You would think they already have enough to do running whatever business they are in. In addition, they are essentially delivering “bad news” once per year when they raise employee contributions. This change has made health insurance much less of a benefit. And many people believe that it is rising health care costs that is holding back salary increases. So, indirectly, employees are really paying for the health insurance through lower incomes.

As these “new benefits” enter the market there are challenges. Employers aren’t sitting there with the budgets to provide all these solutions. HR departments, that are already strapped for time, don’t have the capacity to evaluate, purchase, communicate, and administer such programs. And many programs only address a subset of a population. A 48-year-old overweight diabetic has different needs than a 23-year-old triathlete with no money who just crashed his car. Meeting the needs of a broad employee population is not easy. While today these may be new ideas, there may be a day in the near future when this will be an expectation of employers.

Helping employers meet the needs of this changing market is an opportunity that can also be exciting. The idea of helping someone have a “better day” because you provide an outlet for an individual that has some immediate need, can be rewarding. But, as stated above, this is not easy. As the definition of employee benefits is redefined, it may also redefine what people call themselves who serve this market. It may start separating the traditional Group Insurance Broker/Consultant from those providing redefined Employee Benefits Consulting. Those lines are blurry today. They may not be in the near future.

Webinar Invite – Taking HR to New Heights


2017_webinar_hr_without_limits_linkedin_mast33

For those employers interested, we are conducting a Webinar about HR and HR Technology that can change the way you think about HR. We guarantee you will hear a perspective on the market that will get you thinking. We have done this live and employers have said, “You made 4 or 5 points that I have never heard before.”

The market is changing and the opportunity to “Take HR to New Heights” exists. The problem is most employers don’t get there because of all the obstacles in the way. We analyzed the market and identified 54 obstacles to success. This webinar will expose those obstacles and provide an action plan to take HR to New Heights.

If you would like to attend please click on this link. REGISTER NOW . This is reserved for employers or partners of ProHCM only.