Category Archives: Health Care

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!

The Health Insurance Tsunami is Coming – and It Will End Employer Health Insurance as We Know It


By Joe Markland and Mike Davis

This article is being written after an open and honest discussion with my benefits broker friend Mike Davis this morning over breakfast. Mike is a 30-year veteran in the business who had already sold his first benefits business around 10 years ago. After some in depth thinking we drew the same conclusion as it relates to the employee benefits business. A tsunami is coming at the employee benefits broker and most don’t see it, but it is out there. This tsunami can reduce commissions from $30 PEPM to $15 PEPM overnight. For those not prepared it could be catastrophic, however for those prepared, there may be fertile ground on the other side. Regardless, it is coming.

Mike – While this is something I have thought of as inevitable for several years, this renewal season has somewhat sealed the deal in my mind. Large increases and even a non-renewal in a market where recent tax law changes are giving employers an “out” have made me conclude it is imminent. The problem with employer-based health insurance is the perpetual gamesmanship required to find a different or better risk pool. Solutions like hiding in the pool, self-funded, level-funded, referenced based pricing, captives, and associations are all short-term solutions designed to “game the system”. In reality, the types of plans or funding are segmenting the risk pool which contributes to the larger problem of rising health care premiums in America. Many don’t want to admit this, but we are all whispering to ourselves that this is the reality. As a result, health insurance and then health care is about to change in significant ways and distributors like myself need to act or get wiped out. The phase-out of the current system and opportunity to morph has just begun.

Joe – I have been watching this market for some time and have conducted webinars and written articles about the “Coming End to Employer-based Insurance”. I will be honest, I have taken many arrows from brokers who have not liked my message, though my message is simply based on listening to people like Mark Bertolini, ex-CEO of Aetna, and an advisor to Donald Trump. Both are saying that employers should not be in the middle of health care. Bertolini took action selling to CVS. Trump through Executive Order made an individual policy tax deductible and allows the Employer to use the HRA as a contribution conduit for their contribution. They spoke. I listened and acted myself by forming my new company, N4one HR and Benefits, that is designed to thrive whether the health insurance market changes or doesn’t.

We aren’t saying the sky is falling for the sake of selling fear. From others perspective the current employer-based healthcare market is already very broken. Employers and employees’ skies are already falling because the cost burden of health insurance is significantly impacting profitability and for the individual their personal financial health. For much too long the existing ecosystem of carriers, brokers, and administrators have simply pushed the costs around. And the argument that health insurance costs are high because the cost of healthcare is high will fall on deaf ears. Healthcare costs are high because the current health care financing models do not create incentives to control costs. Those incentives need to change which include empowering the consumer.

Employers are sick and tired of being in the health insurance business. Some have started the process of getting out by looking to offer individual products through an HRA. There will be some this year, more next year, and before long there will be a Tsunami moving to individual options. We believe that after the election the deduction for health insurance will move away from the employer and to the individual, ending traditional group health insurance forever.
People and businesses are slow to change. Employees at Blockbuster were Netflix subscribers and Blockbuster could have bought Netflix. We think this is your Blockbuster moment. The Tsunami is coming. We don’t know when it will hit but it could be much sooner than anticipated. It really doesn’t matter to a certain extent because if 5% of your clients want out and you don’t know which 5% then you need to address them all. This must start NOW as the renewal season has begun, and the law takes effect for this renewal.

We have built a model that we believe can help a broker not only survive but thrive when this wave hits. However, it takes careful planning, hard work, and flawless execution. This takes time and scale. Our model shortens that time and delivers the scale needed.

Mike – Joe has been talking about this for some time. I was a doubter too (as to so soon), but his predictions have come true. A simple stroke of the pen and the world has changed. It can change even more. His argument about market dynamics simply makes sense. I read 3 weeks ago of Cigna’s re-entry into the individual market, then the same last week of United. The ACO/Value Based tight network plans are emerging from commercial carriers and Health Systems as well. While difficult for an employer to choose one ACO plan that serves all, if each individual can choose on their own, the viability increases exponentially…not to mention the individual’s ability to purchase very rich or very lean benefits to suit their needs. Like you, I can’t take the chance that the market doesn’t change. As the saying goes, “Hope is not a strategy.”

Our solution requires three things:
• First, prepare for a world where you can handle twice as many clients with the same amount of staff. This can happen in a future world where service demand decreases substantially as it is supplanted by on-line/telephonic enrollment and member services.
• Two, expand your revenue capabilities by expanding your product/services capabilities.
• Third, market, market, market, the new value proposition to sever existing relationships

We think that the small brokerage firms with deep local knowledge and relationships, and entrepreneurial work ethic, armed with the technology tools and support can adapt most quickly…. yet they don’t have the capacity or capability to do this on their own without a significant capital investment. Our solution is to do this in a shared services model through our N4one HR and Benefits organization, which is an organic broker consortium that will grow and be directed by its’ members. This isn’t merely a technology buying group or scaled product procurement Broker Association. It is a business transformation company.

We are looking for just a few brokers per geographic area to bring a new model to market. Collectively, with a unique value proposition, professional marketing, and educated and armed professionals on the front lines, we can do something great for employers and their employees. However, it requires some clean thinking and a willingness to change. If interested give us a call at 508-498-7591.

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

 

When Things Don’t Make Sense – Prepare for a Change


I was out having a beer after work a few weeks ago with a few friends when a woman across the bar started telling everyone how her son just made $500 selling Bit Coin. The first thing I thought was 2008, when the housing market tanked. When things just don’t make sense, there is big change coming and with it may come a lot of pain. In the movie the Big Short they found waitresses in Florida owning 5 houses when they had little income. Back then I remember thinking, “how can housing prices continue to rise at this crazy pace.” Like most others, I did nothing, and would never have imagined things were as screwed up as they were. Whether it be Bit Coin, Housing, or the Tech Bubble of the late 90’s, it seems like these Ponzi schemes with a product are not going away. In the industry I play around in, the health insurance business, is going through this now. Things don’t make sense. Change will come.

A few other things don’t make sense which is a sign of the times. My daughter is spending her semester of college in Barcelona. It will cost me less to have her study a semester in Barcelona and travel throughout Europe than have her study at the University of New Hampshire, where she will graduate next year. It doesn’t make sense. High college costs need to end. Nobody seems to care.

I saw a medical plan the other day that an employer was providing that had a $6800 deductible. That is not insurance in a country where 70% of the population is living paycheck to paycheck. The system is broken. It must change.

This same health care system has people getting on planes in our version of Domestic Medical Tourism to have surgeries in lower cost areas across the U.S. This is just plain stupid. How do you move populations of people all over the place to get health care when they would prefer it closer to their homes where friends and family can support them? I wonder how this idea can support the 6.5 million people in the Boston area. Are they going to get on planes and fly to Kansas? When you see something real dumb, change is on the horizon.

I would add that my medical insurance premium renewal was +29% this year. This was after +16% last year. It goes on and on. Then it will crash, and it should. Unfortunately, until then, our health insurance will continue to cause pain. And please, don’t tell me how you saved someone money by putting them in a captive with medical tourism, some new RX plan, and a personal direct primary care physician. All are symptoms of the problem. Aetna and CVS get this. They are trying to change this. Most perpetuate the insanity.

In the health insurance industry, we have seen private exchanges, then captives, now the buzz is referenced based pricing, domestic medical tourism, and direct primary care. For someone who has been in the business for 20+ years all of these seem like old ideas rebranded as something new. Some see this as change. I see all this as symptoms of a bigger problem. These trends will come and go. They may hide the problem for a while or simply push the problem forward a few years. But it doesn’t make sense. So, things will change.

Let 2018 be the year where we start tackling some tough problems. Health care costs, college debt, market bubbles that create havoc, Ponzi schemes with products, are all things lurking behind the scenes that for some reason most of us are blind to. Others we see yet push to tomorrow. The bubbles continue to grow. Tomorrow will come. Look around, if it doesn’t make sense, it should change. We can continue to ride on this rollercoaster of steep ups and steep downs or choose to do something about it. Let’s start.

I am starting by writing my book about how to fix health care in America. I think I have a good solution. I may never finish it, or I may be the only one to read it, but I am going to try. Maybe after that I will tackle the high costs of college. My kids will be out by then, but the madness needs to stop.

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.