Episode Details

I'm gonna run through the five reasons Lauren Vela talks about in this healthcare podcast for the "why" with the inertia in benefits departments of self-insured employers. But before I do, let me report that, in sum, they add up to … in many cases, benefits folks sit between a rock and a hard place.

You really can't poke fingers at benefits teams who don't have the bandwidth, the resources, the expertise, or the organizational power to, in essence, run a small insurance company in-house and also do the rest of their jobs.

This is especially true when benefits teams get no help or air cover from the CFO or CEO of their companies. So, the bosses are, in effect, telling benefits teams to manage the second-biggest company expense—this uncontrolled thing growing at multiples of the rates of inflation. They say, "Go get a handle on that but also don't make any noise, don't disrupt anything." And meanwhile, I don't know, is the CFO under the impression that all he/she needs to do is pop by once or twice a year, issue some nastygrams about renewal rates to people who have no training in any of the financial and probably other skills required to manage this huge spend?

And/or, on the other hand, the CHRO doesn't report to the CFO—so, same result, opposite problem.

Here's the five pillars for the "why" with the inertia that I explore pretty deeply with Lauren Vela on the show today:

1. Transforming the healthcare industry is not actually in the job description of benefits professionals.

2. Outsourcing to consultants. Benefits departments a lot of times don't have the resources or adequate staffing to get deep into the complexities of healthcare, which means that lots gets outsourced to consultants. If you have listened to the episode with Paul Holmes (EP397) or AJ Loiacono (EP379), the problem here is that many traditional EBCs (employee benefit consultants) and brokers have a very vested interest to maintain the status quo. Currently, some are able to skim commissions of up to 30% of pharmacy spend, of employer healthcare spend, into their own pockets. These consultants have zero interest in upending absolutely anything. Employer inertia is paying for their vacation home, after all.

3. Nobody gets fired for hiring the same ASO (administrative services only) or TPA (third-party administrator) or PBM (pharmacy benefit manager) or whomever as their predecessor hired or they've been using for years. But they might get fired for doing something new that doesn't go so well. There might be no patience for even the shortest of learning curves or the smallest amount of disruption. There's also the aspect of a benefits team being capable of selling a transformational idea up the organizational ladder. Does the benefit department really know what the goals of the C-suite are? And if they aren't crystal clear on C-suite goals and aren't the best presenters in the world, it's gonna be a no-go on the new idea and then, yeah … inertia.

4. There's no obvious solution, no magic bullet, or easy answers. It might be hard to even figure out what to do that might have the positive impact a benefits team might be looking for. And then we get into the "is the juice worth the squeeze" discussions.

5. There is a status quo bias. Inertia is human nature.

But at the same time, employers are wasting up to 30% or more of their healthcare benefits spend. That's a lot of money. These dollars are getting siphoned right