Tag Archives: Health Insurance Marketplace

“Alexa – What is my deductible?”


When it comes to adoption of technology simple is most often better than complex. Steve Jobs and Apple went to great lengths to make their products simple. Without user adoption products fail. Current technology trends continue the move towards simplicity with the advent of artificial intelligence and personal assistant tools like Amazon’s Echo and the Google Home. Before you know it, these tools will enter the benefits world. The question is, who is going to be first and best? And if I am a benefits broker how does this impact my business?

While many brokers are aware of the vendors that call on them or have tradeshow booths at industry conferences, I believe the benefits technology race is going to heat up with new competition entering the market. These new competitors see the market opportunity to automate large segments of our economy including health insurance and health care. You may have heard of some of these companies like Microsoft, Google, Salesforce.com, and Apple. This would be in addition to current leaders such as ADP and Paychex. The stakes of the game will change and the price of entry, from an investment standpoint, is in the hundreds of millions of dollars. Those with the capital will quickly outpace those with less capital.

Don’t be surprised when you start to see major mergers and acquisitions in the HR and Benefits space. Could Microsoft buy Ultimate Software? Why not? They already purchased LinkedIn and recently hinted at getting deeper into the HR space.

When I look at products like the Amazon Echo and Google Home I see products that have very quickly grabbed market share with high rates of adoption. My wife, who is not an early adopter of technology, quickly became a user of Google Home. Why? Because it is easy. Would she have a better understanding of her health insurance if she could simply ask Google? Absolutely!

Benefits technology, on the other hand, has not had broad adoption by employees. Yes, employers have bought systems or brokers have given them away, but when you look at utilization on the employee side it is abysmal. I believe the reason for this is because there is not enough value as a stand-alone solution to generate broad adoption. Keep in mind that the majority of people hardly use their health care in a given year so there is little need to access such a system. I don’t know about you but I can hardly remember the login to my computer never mind something I may not use for 6 months.

The next generation of technology in the HR and Benefits area is going to have broader and “everyday” value, while being much easier to use. Market leading vendors, especially those with a great deal of capital, will invest in the latest technologies to try and win the technology race and gain more customers. And before you know it you will be saying the following:

“Alexa, is Dr. John Smith from Boston in the Blue Cross network?”

“Ok Google, request Friday off from work?”

“Hey Siri, how much does the average office visit cost?”

“Alexa, what is the balance of my 401k?”

“Ok Google, transfer $500 from my savings to checking?”

The advancement of technology and artificial intelligence has enabled many to have more personalized user experiences. Your Amazon Echo will “get to know you”. Maybe in the near future your doctor will get to know you a little better too.

Many benefits brokers have chosen some technology vendor with a mission of putting as many clients on the system as possible. This is a risky position competitively as more advanced solutions from highly capitalized companies come along. I don’t know many sales people or business owners in any industry who like running around with the 8th best product. Even more so when it is not necessary. The market and your customers do not care if you have invested thousands of dollars on some technology that may quickly fall out of favor.

One should take the advice of Jack Welch, ex- CEO of General Electric who once said,

“If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”

For those that have purchased the Amazon Echo or Google Home you don’t have to look far to see that the outside world is changing faster than the inside. The health insurance and health care industries often feel like they are moving at a snail’s pace. Private Exchanges were lauded as change when they really are a reincarnation of cafeteria plans from the 80’s.

With the Trump administration, changes in health insurance legislation may create a shift that empowers the consumer. The industry may need an army of people on the front lines to help the industry move to a whole new paradigm. The vendors will need help and the employers and employees will need it too. The technology is there. Alexa is ready. Are you?

“Fire” – Obamacare is Not the Only Healthcare Plan That is Burning


I had a short conversation today with a woman that was somewhat surprising and maybe very telling. I was having a prescription filled and I spoke briefly with the women handling my order. I had to give her my new insurance card (third carrier in 3 years) and mentioned how I had to switch often because of price increases. She then told me that she had a $4000 deductible and close to $15,000 in debt from medical bills. I was shocked. Her employer is a major employer and more than likely a benefactor of Obamacare, yet her deductible is $4000 and she has medical bills causing financial duress. I would imagine this story plays out across America. It is a system that is more than broken. It is on FIRE!

In this political environment where Obamacare is in the news daily I think the problems with employer-based insurance gets lost in the discussion. It seems like people have created a one-to-one relationship between Obamacare and the Exchanges. It is the Exchanges getting huge increases. Insurance companies are leaving the Exchanges because of big losses. Many markets only have one option. And of course you won’t have to switch your doctor. All this noise may be hiding the fire that is also burning in the employer healthcare market.

On the employer side, some of the same dire stories are playing out except the press seems to be ignoring them. Sure, if you look for stories like I do you will find them, but they aren’t on the front page of the NY Times or the lead story on the Nightly News. Relative to the fire burning in the Exchanges the employer fire is smaller, but it is still a big fire. I am sure the woman at the pharmacy was much more concerned about her personal “fire” from her healthcare expenses than what is going on with the Exchanges.

If you have employer based insurance, then you more than likely have a single medical insurance option. Your contributions may have increased by 30% or more over the past few years. Your deductibles and coinsurance may have doubled. You don’t even know what coinsurance means. And the odds are greater than 50% that you don’t have enough money in a savings account to pay for your deductible if needed.

If you are an employer, you are tired of the regular rate increases and delivering bad news to your employees. You have not been able to give employees raises. You may have tried PEO’s, captives, wellness programs, cost shifting, HSA’s, self-funding on smaller and smaller groups, or private exchanges, to try and control costs, but at best, are these are temporary fixes if they even work at all. I was once asked how can you reduce health care costs. I said don’t hire anyone old. Is that what this will come to?

While the focus of Obamacare has been on the Exchanges, Obamacare technically covers health insurance in its totality. Employer based insurance is a part of it and it is part of the problem. Fixing health care includes all of it, not just the Exchanges. It is all related. Government intervention putting the squeeze on individual policies, small group, Medicare and Medicaid only shifts the problem to employer plans. And when an employer with a younger population counters that action by going self-funded this results in the younger, healthier people, not contributing to the pool. We heard this before, you need the young to participate for this to work. The recent race to get younger groups self-insured impacts the entire system. The game goes on.

We can all speculate as to what Trump is going to do to try and fix the healthcare problem. Based on what I have been reading his focus is not limited to the Exchanges. He recognizes the problems span the entire healthcare industry and that includes the problems with employer-based health insurance.

For benefits brokers it would be naïve to think that the only change to employer-based insurance will be the elimination of the employer mandate. There is a fire burning at the employer level too and this fire is not unrelated to the other fires burning on the Exchanges. Most of the conversations I hear, or articles I have read, reference the Exchanges as something totally separate from employer-based insurance. I believe one can’t be solved without significant changes being made to the other. Anticipating what those changes will be and becoming part of the solution is a big opportunity. Stay tuned because we are about to see what the next administration has in store.

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.”

What is the Secret to Your Success?


I have been writing blogs, conducting webinars, and speaking at conferences for some time. They say this is what you should do to market yourself or your company. Personally, I simply like writing and speaking. I also enjoy an intelligent discussion with educated people. One thing I have always struggled with is divulging too much information. Everyone says that you should blog and tweet, and do whatever else to get your message out, but you know what, I am beginning to think that this is not always a good idea.

I always refer to “when I was an athlete” which these days seems to be getting further and further in the rearview mirror. But when I was an athlete we always depended on secrets. In football, we would never show the other team our playbook. We would run play-action fakes to make the defense think it was a run when we were passing. When pitching, my goal was to fool the batter. I certainly wouldn’t announce to the batter when I was throwing a fastball versus a curve. Fooling the opposition was a part of the strategy. It was something we did to improve our chances of winning.

In business Steve Jobs would fire someone who would disclose their secrets. Apple went way out of their way to keep whatever it was they were doing secret. In technology, everyone has secrets.

The formula for Coca-Cola was created in 1886 yet only a few people know the formula. In fact, the formula is stored in a vault in Atlanta. And Kentucky Fried Chicken has two different companies create half of their herbs and spices recipe each so that neither one knows the whole formula. I don’t think either will be writing a blog disclosing their recipes.

When it comes to business I often refer to a quote from Mark Cuban that says, “The best way to predict the future is to invent it”. Peter Thiel thinks that the key to a successful business is discovering a “secret” that few others have yet to discover. I agree with them.

So if I were to ask a person what they think the secret to their future success will be I would not expect to get an honest answer. Yes, you will get an answer like “hard work”, or “treating your employees well”, or some other comment that sounds nice that everyone uses. But the key may be in their secrets. Because business is a very competitive environment and to win you need the element of surprise. It works in sports and is critical in war, so why would it not be in business?

I think there are some secrets yet to be uncovered in the benefits business. Secrets that maybe can make the difference in the future of one’s business. But you won’t find those secrets in some blog. You won’t read about them in some industry magazine. You won’t hear them at some broker association meeting or in some little broker group. And those that are tweeting all day probably don’t have something valuable to tweet because if it was that valuable they wouldn’t be tweeting it.

You shouldn’t expect to find any secrets in this blog either. Because the good secrets – the ones that can bring in customers at a rapid pace – the ones that take weeks or months of thinking and years of planning and execution will not be found in the public domain. If you want to find the secrets you need to start looking in the right places. Sometimes those places are staring you right in the face but you don’t see them because your thinking has blinded your vision. In fact, close your eyes. And open your mind. Challenge your thinking. And stop looking on the outside because the answers will come from within. Because to win the game you may need to strike out the next batter. And it may not come from the 92-mph fastball. It may come from the 75-mph curve.

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.

How well do you know your customers?


In today’s environment where information is readily available and leveraging the web and mobile to provide service is an expectation, personalizing that service is also expected. When I buy an airline ticket I am asked how I would like to be informed of any changes (email, text, phone call). When I check into my preferred hotel chain they have my preferences and personalize my service. For some reason this type of personalized service hasn’t become the standard in the benefits business, or at least to the level of other industries.

I often reference the Wellness Newsletter I got from my broker giving me tips about pre-natal care. As a 54-year-old male this is not relevant and the email itself not only did not address my needs but in some way reflects poorly on my broker. It made me think he is really not that organized. Not only was the newsletter not relevant to me, but what my broker also does not know is that I already subscribe to a Wellness Newsletter directly from another online company. This newsletter sends me the information that relates specifically to someone my gender and age and is delivered at the frequency I want in the method that I want. I did not need a Wellness Newsletter.

On another occasion a broker I know provided an online HR Library to the HR person of an employer where the outcome was not what was expected. This HR person was on a committee for a company that also provided HR content on the web and she found many flaws in the product the broker delivered. It started with good intentions, but the outcome was not what the broker intended. Should the broker have known the HR person was on such a committee?

I can go on and on. People putting in enrollment systems to clients that already owned one but didn’t know it? Building benefit websites for employers that already had a regularly used intranet. I am not just pointing the finger here at others. In my own organization we struggle with the same issues when serving our clients.

All this reminds me of some stats I saw from a book published by Jack McKean titled, “Information Masters: Secrets of the Customer Race.” In the book he cites the following:

“Only 2% of the knowledge that organizations have about their customers is actually used.”

“Only 5% of the body of knowledge about a client is available digitally and indeed only 20% of the knowledge is recorded at all.”

What is amazing is that this book was published in 1999. The stats may not be the same today but it in many cases it is close to the truth. And of course this is not reflective of you and me. We are better than this.

It takes a lot of work to create a personalized service experience. You need technology to store and manage the data. You need a methodology to gather information and keep it current. You need processes in place to automate certain functions. You need people either on staff or through an outside resource to plan and execute such a strategy. It is a herculean effort.

In today’s environment most brokers provide service to the employer which could include HR, finance or the business owner. This has its own challenges but at least gathering information to personalize the service for a few people is somewhat manageable. Imagine the effort if we move to a consumer centric world where the services need to be personalized for the employee. What is the broker’s role in this environment? What would be the cost in time, technology, and resources, to deliver the experience consumers expect in today’s world.

From the employer’s perspective they have the same challenges. The expectations of how they are going to support their employees is changing. The needs of a 26 year-old with significant college debt are much different from a middle-aged employee preparing for retirement who may have health issues. These employers may not have the resources, technology, or capital to move their HR to this new level.

Many brokers say they provide such services but I have not seen it. Many do provide great service but not in the personalized way I am talking about. Relative to their peers in the current environment they may superior. But what happens when someone comes along and raises the bar? This happens often in many industries.

As someone in the technology consulting business I am seeing firms behind the scenes beginning to develop new models of service. Models that don’t exist today in the benefits world that can raise the bar. And it can raise it in a way that gives these firms a distinct competitive advantage that is not easily duplicated. Like providing benefits advice to a millennial on a Saturday afternoon via video conferencing. Some of these firms are traditional brokers but others are coming in from outside the industry. Those outside the industry love disrupting current business models. The health care business, and by extension the benefits industry, is a primary target because the capital running through it is so high it invites disruption. People want a piece of a very large pie.

Many brokers rely on relationships and are pretty sure their clients are loyal. I once saw a statistic that said that most companies think about 80% of their clients would be loyal. When employers were asked how loyal they were to their vendors the answer was 20%. This is a huge disconnect between perception and reality. One way a relationship can be severed is when a competitor brings in a better idea or better service. Companies like Zenefits displaced $63 million in commission business from many brokers with loyal customers. One told me he lost a 20-year relationship to Zenefits. So new ideas can be powerful.

I am not going to pretend to have all the answers. And I certainly look in the mirror when writing this because I am somewhat talking to myself too. But I have seen technology and models that can start the process to personalizing service for employers and employees. I have spoken to some companies that have started the process. I have seen the revenue models too. I don’t know when this “tipping point” will happen, but it will, because it is possible and the market wants it. And the opportunity is there for those who want to provide such services, but one must start. So my advice is to start. And start today because it is a big challenge.

Are You Too Comfortable to Change?


I don’t hide the fact that I think the benefits world is going to change. And when giving presentations I often refer to a quote by Steve Case from his book the Third Wave that states “Incumbents often fail because they underestimate the speed at which the future is approaching.” But something became evident today when talking to a broker about some of the changes going on in the industry when I realized that he simply did not want to change. More likely he didn’t want to take risks. Not everyone is a risk taker. In fact, very few take big risks.

I have heard at least once, or maybe a hundred times, that benefits firms are struggling with organic growth. The thing about the benefits business is that it is getting commoditized. I hear it all the time. I don’t always hear it from the business owners or the producers living off of a block of business and referrals, but I do hear it from the young producers who are dialing for dollars and knocking on doors. They are begging for differentiators but often the owners are living in a different world. And from the owners’ seat many don’t see the different challenges between what the veterans and what the rookies are facing as it relates to the competitive market.

To be competitive in today’s world it is important to change. To have a unique value proposition that is not easily duplicated is important. But change often requires taking risks. As Mark Zuckerberg says, “In a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”

The thing is few want to take risks. I have pointed out new competitive threats many times to brokers who did not act until they lost business. In fact, over 50% of our new clients lose business after hearing about a competitive threat and not taking action. Losing business is a pretty big motivator. Yet most won’t act until they feel the pain.

I had one broker tell me his clients or prospects didn’t want one of the new HR technologies. I couldn’t imagine every firm in his market thinking the same thing. Anyways, what I didn’t tell him was that the reason I was calling him was because I was working with an employer that told me she decided not to choose him as a broker because of his technology strategy. Brokers often know why they lose clients but often don’t know why they lose prospects, which was the case here. Do you know why you lose prospects?

I have had people read my articles and ridicule me because of the message. Often I am just pointing out that there are some out there who say the benefits business is going to change. Zenefits, Gusto, and Namely are changing it. The CEO of Aetna says it is going to change. The government may also want it to change. All are a threat to the status quo. Sometimes I think that people don’t want to know these things. It is like having a lump in your side and you don’t want to check it out because you may think something major is wrong. If you ignore it, it will go away. Well, I don’t think so.

Change doesn’t happen because you wake up one day and say “I’ve changed”. And change doesn’t happen because you stock your shelves with a few more products or services that are easily attained by anyone. I see many people “pretending” to change but not really changing. And I say, “not really” because the changes I imagine brokers need to make aren’t easy. Many brokers are choosing “easy”, thinking they have made big changes. If the change doesn’t make you feel uneasy. If it doesn’t appear to be very risky, then many will do it, and they do. Then you are not unique.

Personally I think there are big opportunities in the benefits business. I would say more so that I think there are big opportunities in the human capital management business of which the benefits is a piece. But to capitalize on those opportunities one must change. And this change requires taking risk. Big risks.

So you can stock your shelves with new toys. You can do all the sales training in the world.  But what if insurance commissions were cut in half on January 1st?  What if the government made individually based health insurance tax deductible? What if Zenefits, Gusto, Namely, and Paychex are right and employers will switch brokers for HR and Payroll technology and services? That would require the type of change I am talking about. And if some of these things happen and you “underestimate the speed at which change is approaching” could you survive?

I don’t want to over-generalize but I think we have an industry where taking big risks isn’t the norm. Protecting the status quo is. But there are big opportunities for those that really want to take some risks and Challenge the status quo. Feel a little uncomfortable. Work a little harder. And have a lot of fun along the way.

I am going to finish by saying our new business, ProHCM is all about challenging the status quo. It is taking a big risk. It is different, very different. We are betting on and preparing for a future that may be approaching faster than most anticipate. I am looking for the blue oceans. So I will finish with a quote from another FaceBook employee, the COO, Sheryl Sandberg, “If you’re offered a seat on a rocket ship, don’t ask what seat! Just get on.” It could be fun.