Category Archives: Private Exchanges

The Status Quo is “The Other Guy”


What is the status quo? In the benefits business, there are many who like to label the “other guy” as protecting the status quo. Yet, after I learn about what the person making the proclamation about his/her competitor is really doing, I conclude that they are protecting the status quo too. I know there is a desire to be different in business. Many books have been written about needing to be different. However, one is not different through a simple proclamation.

I hear new ideas every day. In the health insurance and health care businesses some of these proclaimed “new ideas” are really repackaged “old ideas”. Private Exchanges promoted as new in 2014 were recreations of cafeteria plans sold in 1986. Level-funded plans are similar to minimum premium plans sold in the early 90’s. GAP type plans were being administered in the late 80’s. On many occasions, these were promoted as new and if you didn’t sell these products, you were protecting the status quo.

Now we have an army of benefits advisors promoting things like direct provider contracting, direct primary care, referenced-based pricing, as the new savior of the health insurance system. Yet, according to one-person I quote and trust, Mark Bertolini, ex-CEO of Aetna, “direct contracting will be a failed model”. Those promoting these programs are claiming that those that don’t promote them are “protecting the status quo” while a respected insurance executive says they won’t work. Who is one to believe?

I am taking a different perspective. What if protecting employer-based insurance in general is protecting the status quo? There are brokers running around saying “Mr./Ms. Employer, you are in the health insurance business, get over it and take control”. Put in all these programs to micro-manage your claims. Well I am pretty sure employers don’t want to be in the health insurance business and be in the claim’s management business. (Though they don’t mind giving the employee some money.) If given the option to get out they would.

I am also pretty sure most employees would like more health insurance options versus having the limited options provided by employers. I know I would want more options. Yet I see no lobbying to get the employer out of the middle of health insurance, other than from the likes of Mark Bertolini and President Trump. So, if virtually everyone wants the employer out of the middle, then I would conclude that protecting employer-based insurance is protecting the status quo?

President Trump, through Executive Order, made the biggest change to our health insurance system in the last 60 years. However, rather than embrace it and deliver what most employers and employees want, the industry is somewhat ignoring it. I have some news though; this is not going away. The train has left the station. Employers and employees will eventually get what they want, and when they get it, they won’t go back.

So as one wanders through this health insurance maze, pause before you label “the other guy” as the one who is protecting the status quo. In some eyes, the one protecting the status quo may be the one in the mirror.

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.

Beware the Benefits Blind Spot


In the most recent election the one thing we learned was that the media, and probably most Americans, had a blind spot. For some reason, they did not want to see or hear what many Americans were thinking. And maybe, for some reason, people did not want to say what they were thinking, until that is, when they went to vote. Now this is not a political discussion as I am sure many are tired of political debates by now. But this does remind me of an article I wrote this spring titled, “Two health care stories – Which do you believe?”, that is worth bringing up again. In the article, I wrote about two stories being told about how to solve the health care problem in America. The problem is the noise created by one side was drowning out the other, creating a benefits blind spot.

Now that Trump has won the election the articles and chatter about how Trump is going to reform healthcare is growing at a rapid pace. The noise is getting loud again. Yet, as I read some of the articles, blogs, and chat going on, I am sensing that the benefits blind spot still exists. It may be getting even worse now that the Hillary plan of a public option appears to be in the rearview mirror. Having such a blind spot, when running a business, or when running for President, can have negative consequences.

I don’t recall where I read it but I once read that one of the keys to marketing and messaging is to try to say what the buyer is thinking. And buyers don’t always tell you what they are thinking, even when you ask. So, you need to try to understand the buyer. To do this you need to ask and answer some tough questions, as if you were in their shoes.

What do employers want? Do they want to be worrying about whether they just hired a person who has a wife at home pregnant with triplets? Do they want to be telling their employees their costs are going up again every year? When I spoke at a conference about Private Exchanges I asked some employers why they would be interested in a Private Exchange. You know what the answer was. They thought a Private Exchange would get them out of the health insurance risk business. It was an out for them, at least they thought so.

What do employees want? Or maybe we should be asking, what do consumers want?What is more important for most people, broader access or lower costs? Do they want portable insurance? Do they want penalties for not participating in a wellness program? Do they want national healthcare?

When you think back on the Presidential campaign there were signs everywhere of a potential Trump victory. Trump rallies were like sold-out rock concerts. When I was in Florida on Election Day I mentioned to my wife about how many Trump signs we saw and how few Hillary ones there were. The Trump campaign apparently saw things most didn’t. In the final days, he was campaigning in states like Michigan where most people thought he was going to lose. Maybe the signs were there but people either did not want to see them or were simply not looking. It appears Trump was delivering a message many people wanted to hear.

This may be happening in the healthcare market right now. It is not just ObamaCare that is broken. ObamaCare could be an unintentional distraction that may be creating a blind spot as to what is going on. There may be a silent majority that wants a different type of healthcare system. And they won’t tell their broker or insurance carrier because in their eyes you may be part of the “establishment”. And the establishment often does not want change.

To prepare your business for the future one needs to understand what the future will look like. To do so will require that you eliminate the blind spots. I have shared my personal views about where I think the market is going several times in the past. The Trump election has changed it a little but I too have to be careful so that I don’t bias my own views. If the healthcare market goes to where I think it is going I believe there are big opportunities for those that provide value in the new market. But what about those that don’t change. Well, it was Barack Obama that said clearly, “Elections have consequences.”

Consumerism in Healthcare is Not Practical


I read a lot of articles about consumerism and how employees need to be better consumers. And as one who implements technology I am very familiar with most of the decision support tools in the market and all the online symptom checkers. So let me make a bold statement. It is all garbage. I have always thought that individuals will never have enough knowledge to make educated health care decisions. Health care is too complex and always changing so how am I ever going to have the time to keep my knowledge current. I don’t want to, trust me. And the last time I needed health care I was driving very quickly to the emergency room. Not a lot of time the think there.

I recently listened to a presentation that Aetna CEO Mark Bertolini gave a few years ago at Stanford. (you can see it here) The final question asked of him was as follows: “How do you create a more educated consumer in a marketplace where they are being directing their own health care decisions?” What surprised me was his answer.

“Trying to educate to everybody on how the health care system works and the level of detail isn’t going to work. Sorry to say. And the reason is that unless the amount of information I can gather is immediately available and that when I act on it has an immediate response I am not going to pay attention to it.”

With all the articles out there about consumerism and directing one’s own health care I thought I was the only one that had such view.

Every time I have my car fixed I am wondering whether I am getting ripped off. I don’t know enough about cars to “shop the market” for service. I remember watching 60 minutes or one of those shows where they show auto mechanics taking advantage of everyday consumers by doing things people didn’t need. That’s me. I wish I had a trusted auto consultant who would tell me whether I really need the services some mechanic is saying I need. You get my point. If I don’t know whether my car is getting the proper treatment how the heck am I expected to figure out whether my doctor is doing the right thing.

Just last night my wife and I had a debate about the value of multivitamins and we couldn’t even agree on whether they worked or were a waste of money. So I Googled the topic, read a bunch of articles, and still don’t know whether multivitamins work.

Let’s not confuse choosing health care versus choosing health insurance. When choosing health insurance is one supposed to be predicting what their needs are going to be in the next 12 months to essentially “game the deductible”? Insurance is supposed to protect one from an unanticipated event that may cause financial duress if one were not insured. Anything that doesn’t fit into this category is simply a reimbursement plan. Dental insurance is almost not insurance. It is a prepaid reimbursement plan for most. There should be two types of insurance plans. One that runs like dental and is simply discounted reimbursements, and another that is real insurance. It is for this reason health savings accounts should rule the day.

So what is the solution? I don’t like when people run around talking about the problems without giving viable solutions so I won’t do that myself. I always say that stating the problem is easy, it is the solutions that are tough. Let me start with what I would want as a consumer. I would want someone who would give me sound advice as to what is proper treatment. I want someone who has an incentive to do the right thing for me. I want someone who would spend my money as if it were their own.

I think the solution requires properly placing incentives. I want to live a healthy, happy, long, and financially viable life. I want someone advising me who understands my goals which I will safely say that these goals are more than likely shared by many. I am all about incentives. It is funny how when you have the right incentives you get better outcomes. That requires having someone who wants me to be healthy and not just fix me when I am broke. This sounds like the things I would want from my car consultant who would advise me on how to take care of my car. I want my car to last long, be healthy, and financially viable. I am not sure what a happy car would look like.

There are emerging models out there that will provide this type of service. And making consumer based decisions around the small stuff may become common. But as a means of controlling healthcare costs, no way. We all know that the majority of health care costs come from few people with chronic conditions. If I need to have my oil changed maybe I can shop the market. But if I need a new engine I would hope to have a very educated mechanic at my side to help me make the best decisions.

The End of Employer-based HealthCare – An Update


In this blog I wrote one of my most controversial articles in December 2014 titled, “The Coming End to the Health Insurance Business as We Know It – And What Brokers Can Do About It.” I don’t know why it caused a bit of an uproar in the benefits broker community because, for the most part, I am just telling people what others are saying. I also conducted a webinar on this topic in July of 2013 titled, “The Next Big Change in the Benefits Market That Most Brokers Aren’t Prepared For” that can be viewed from the HR Technology Advisors website here.

My article and webinar references a presentation by Mark Bertolini, CEO of Aetna, who believes the end of employer based health insurance is coming soon. In fact, he is positioning Aetna for a world where the provider systems hold most of the risk and Aetna, is essentially, no longer an insurance company in the traditional sense. I found a presentation he did for the Mayo Clinic that validates Mark’s positon. You can see it here. Every benefits broker should watch it. What Mark is saying is that health insurance is going to become a direct to consumer retail purchase. The provider systems will be the risk takers not the insurance companies. And there is a movement in Washington to eliminate the health insurance deduction at the employer level in exchange for lowering the corporate tax rate. I believe this is something Republicans and Democrats agree on.

This did play out to a certain degree in my own business. We initially got a 16% increase in our health insurance premium for April 1 of this year. My broker gave us alternatives but none saved us any money. I had to ask them to quote the local hospital system based insurance plan. Their costs came in at 17% below all others. First, I am wondering why my broker did not quote this company in the first place. Second, I wonder how traditional fee for services insurance programs are going to compete with this.

It is almost 2 years since I did my first presentation on this topic. Since that time my partner Don and I have made many changes in our business to position our firm for this change. We have hired new staff and developed new consumer-centric solutions that we think will provide value in this new benefits world. We still have work to do and the market will continue to evolve. It is a bet we are making but I think not believing the CEO of Aetna, who is now merging with Humana, is a much riskier bet.

I am surprised that few, if any, brokers have made any changes to their businesses to prepare for this new health care market. Most are unaware of the magnitude of the potential changes. I don’t look at these changes as a business threat, but an opportunity. The opportunity could be huge for those that provide some value to support this change because there will be significantly fewer competitors in the new market. The value that can be brought to market and how we will get paid is certainly up for discussion. We have ideas.

I am writing this because we are looking for broker partners willing to think outside the box, and challenge the status-quo to help build and deliver a solution that can survive and thrive in the new health care world. The power of the group can be more powerful than us individually. We are not looking for people who want to fight the change and protect the status quo. And “hoping” the world doesn’t change is not a strategy. The time is now.

According to Bertolini the train has left the station. It is not if, it is when the market will change. The financial viability of America is dependent on radical changes to the delivery and cost of health care. This is not just one company, Aetna, trying to impose their view of the world on others. They are taking real action. There are a real lot of highly motivated people who are working to do the same. We can be part of the solution or hope this does not happen. Join us on this exciting journey to be part of something that will change health care in America forever.

Two health care stories – Which do you believe?


As a way to keep my knowledge of the benefits business current, I read many articles, attend seminars, webinars, and industry conferences, and read all the press releases and announcements. My Google Alerts sends me the news I want every day. One major area of interest is how the market is addressing the rising cost of health care. As I had written in a recent blog my company just got a 16% increase and I think we are reaching the tipping point. I am looking for the business models that can control the cost of health care.

What I have discovered is that there are two different narratives playing out in the market. One narrative represents around 95% of all the “noise” and the other just 5%. The 95%er’s consume the publications and have speaking engagements at all the conferences. They put out press releases almost daily and make wild claims as to how their businesses are growing. Yet I find myself believing the 5%er’s. Their message appeals to my logic and understanding of the business. I think there is hope that health care costs will come under control. However, their message is getting drowned out by the noise created by the 95%er’s which could lead to a false perception of where the health care market is going.

In sports there is a saying that “practice makes perfect”. Well that works if you are practicing the right things. If you practice doing something the wrong way you will master the wrong way. In this healthcare debate, discussion, or whatever you want to call it, if you spend your time listening to and believing the pretenders version of where they think the health care business is going you may actually change your business and start practicing the wrong thing. Who you listen to or believe may matter.

There is a better more believable story developing. One that has a chance of controlling health care costs. One that properly places incentives so that providing better care while reducing costs is rewarded. One that as a consumer myself I would find as a more attractive model than most of the current health insurance/health care models.

When people ask me what I think. I don’t sugarcoat things I simply say “I think it is a bad idea.” Don’t waste your time. Often they don’t want to hear this if they have an agenda. So here is what I think.

• Private Exchanges – Bad idea – 30-year old idea – that does not control health care costs.
• Self-insured for smaller and smaller groups – squeezes the balloon – temporary solution that does not control costs.
• Wellness Programs – Nice try – won’t control costs – may make people feel better – could improve productivity.
• Wellness Programs where you charge employees more who don’t take biometric tests – bad idea – employees will rebel. They should rebel.
• HSA’s – Needed but don’t not control costs.
• Large employers collaborating to negotiate with providers – Why? Is this what employers should be doing? Another squeezing of the balloon. What about the rest of us?
• Decision Support Tools – Help you choose the best high cost product that will continue to go up.
• Captives – Simply another risk pool where costs will still go up, up, up in time.
• ObamaCare – A joke. More cost shifting in the end. That’s why my costs went up 16%, again.

All these tactics simply squeeze the balloon. You can push the numbers around but the numbers only get bigger not smaller. Anyone who understands medical underwriting or actuary knows this is the case.

So who should you be listening to? Aetna and their CEO Mark Bertolini; Kaiser; Partners Healthcare; Intermountain Healthcare; University of Pittsburg Medical Center; Evolent Health; Apple. I am sure there are many more. These firms are painting a much different picture of the future of healthcare in America. However, I don’t see them at benefits conferences. They don’t publish in benefits magazines. They don’t make grand claims of having some new invention. They are simply trying to figure out a way to improve the health care system in America. What they have in common is they see getting the providers in the risk business as the solution. This moves the risk from employers and traditional insurers to the providers. They may not all be perfect but they are trying to bend the cost curve.

These two narratives are playing out. One continues to promote fee for service. The other promotes capitation to a much larger degree. I don’t know who will win in the end, because these stories are still being told. But I know what makes sense to me.

The battle for power in health care has begun – Are the brokers powerless?


In this highly energetic election year health care is still one of the major battle grounds dividing the candidates and the political parties. Rubio wants to let employers give money to employees tax-free and let them buy from a broad market. Cruz said he would make an individually purchased health insurance plan tax deductible. Sanders is a proponent of a single-payer system and Hillary wants to bring the insurance and pharmaceutical companies to their knees. As for Trump, I am really not sure what his plan is. What I do know is that there are many people with all kinds of plans and they aren’t asking me what I think.

As someone who is somewhat in the health care industry along with my broker partners the industry around us can change dramatically, yet we have little power to impact change. Are we powerless? Being powerless is a very uncomfortable position especially when the outcome can significantly impact one’s business.

The cost of health care and thus health insurance is a burden on our economy, a burden on employers, and with the cost shifting to employees and higher deductibles it is becoming an ever growing burden on employees. This is somewhat a new dynamic that employers have to deal with too. It is an industry with many interested parties looking for solutions. Those that deliver solutions that can bend the health care cost curve could reap big rewards.

So who has the power to fix this? Insurance companies? Hospital systems? Doctors? Google or Apple or other outsiders with a lot of money? Government? Employers? Employees? Independent consumers? Brokers? Many are trying to solve this problem, some because they honestly care to, and others so that they have a viable future. And for those that think some are “too big to fail” or at least quit, remember this list of companies that used to sell health insurance but chose to leave the business. (Prudential, UNUM, Travelers, Guardian, Metropolitan, Great West, State Mutual) I am sure I missed many others. I don’t imagine these firms that have left the business or the ones fighting to win today care(d) about my interests or the interests of benefits brokers.

The health care system will undergo significant changes in the next 5 years. My business is dependent on the health insurance business because I do business with brokers so how the industry changes is pretty important to me. If the business did not change, then that would work for my business. If I could dictate how the industry evolves then that would be fine too. But without the power to stop the business from changing or dictating its future then those of us on the fringes of the business will need pursue another strategy.

So what are brokers to do? You can fight the change as many of the cab companies are doing to stop the advances of Uber. You can develop the solution and therefore ensure the outcome. However, I doubt that any broker is in the positon to change the health care system or have the capital to do so. You can hope it doesn’t change. You can wait until it changes and then react fast. You can quit as the insurance companies did in the 80’s and 90’s. You can also accept that the world is going to change and that you can’t impact its outcome. If that is the case then you need to exercise the power that you do have, anticipate the future, and bring some value to the market that fits in the new model.

While companies like Aetna, UHC, Google, Apple, and many provider systems are changing or investing in businesses to control health care costs, I think firms like Fidelity, Towers Watson/Willis and other large benefits firms have made significant investments to provide a valuable service to support where the industry is going. Just ask why did Fidelity choose to get into the benefits business now? Why did Towers Watson buy Liazon and then merge with Willis?

We are in an industry where we don’t get to make the rules. We are powerless and have to play by the rules imposed upon us. An insurance company can eliminate commissions with an e-mail as many have done in the individual market. The government can pass a law making individual insurance tax deductible. Carriers leave markets and hospital systems are entering the insurance business. The future is imposed on us.

Don’t think we are the only ones. Those who own Ford dealerships are dependent on Ford to make great cars. A friend of mine has a manufacturers rep business and sells power supplies. One year a manufacturer that represented 60% of his revenue decided to no longer use third-parties to sell their products and sell direct. His business was devastated though he did recover. His problem was that he did not build a business that would have protected him from this risk. Had he planned ahead it may have been different. It is for that reason many car dealers often own multiple dealers representing multiple manufacturers.

In this blog I have written articles on where I think the business is going. (The New Benefits World is Here – Though You May Not Have Seen It I am already making moves anticipating a different future. My experience with benefits brokers is that few have been looking into the future to try and predict where the market is going. Most are hoping the world doesn’t change. Others are waiting until it changes and other are simply selling. I am optimistic. I think there are opportunities for those that anticipate change and provide some value for this future market. In fact, there will be less competition because many will have waited too long to change and others simply won’t have the skills, scale, or vision to bring real value to a new benefits world.

I think a new benefits world will put power in the hands of the consumer. Think about this for a minute, if employers had the power what would they want? If employees had the power what would they want? As an employer, today’s system gives me little power. As an employee I have less. When someone delivers what I want I will say it is about time.

So what advice do I give? If I were a benefits broker, I would start studying where the market is going to go. I would ask employers and employees what they would want. I would gain an understanding of this market like no other. I would engage the companies who are working to create this new benefits world. I would make an educated guess as to where the market is going and when it will get there. Then I would look for the opportunities to provide the value. I would also start now. I have.

PS – I just got my company health insurance renewal today and costs are +16%. This craziness has to end and I feel powerless. Please help!