Episode Details

Let's just start here: As a general construct, insurance carriers have every incentive for health insurance premiums to go up every year. If you're an employer, that is a material fact. Is it counterintuitive? Maybe.

Except if you're an employer and your premiums are going up year after year, it begs the question why, every single year, the already-extravagant amount you pay continues to go up way more than the inflation rate.

You'd think that if your broker and your plan administrator were so great at their fiduciary responsibility over your self-insured plan that this wouldn't be happening. Oh right, whosever PPO network you're using, they don't have any fiduciary responsibility over your self-insured plan. You do, all you CFOs and CEOs and benefit professionals out there. Wait, I misspoke. Plan administrators do have fiduciary responsibility—to their shareholders. The CEO of CVS/Aetna made $36 million in 2019. He's clearly very good at that job. The rest of them are, too. I'm not singling anyone out here. And also, this podcast is not investment advice.

In short, as previously stated, most major insurance carriers and the brokers they pay commissions to have every incentive for your premiums to go up every single year.

That's where we're at, folks. It's an open secret, yet so many are just getting so wildly taken advantage of by carriers and brokers whom they have really put their trust in. If you work for a self-insured employer, tell your CFO/CEO to listen to this show. Or if you are a CEO/CFO or a benefits professional in charge of healthcare benefits, welcome. I hope this information is helpful.

My guest in this healthcare podcast, David Contorno, has been in the benefits industry longer than he hasn't been in the benefits industry. I think he started working in a benefits brokerage when he was 17 or something. Currently, he's the founder of E Powered Benefits. In this episode, we talk about the keys for self-insured employers that lead to better health for their employees at something like 20% or more lower costs. Here's some of the imperatives for employers that David digs into in this episode:

1. Advanced primary care—really valuing primary care providers who do not work for hospital systems and, therefore, are not subjected to the ball and chain of perverse incentives that David talks about at some length.
2. Getting cost and quality data so you can make prospective choices and not get hit in the back of the head with an after-the-fact "gotcha" in the form of an overpriced bill that you are now obligated to pay. Let me bring up all the articles lately in the New York Times and elsewhere … people paying hundreds of thousands of dollars for something that should cost a fraction of that. Most of them have "good" insurance (keep that in mind) from their employer. Also keep in mind that most of these stories that hit the news are the ones where some poor employee got stuck with a bill—not the metric ton of other examples where the self-insured employer was on the hook. If you're an employer, you can get ahead of these "gotcha" moments. It's textbook risk mitigation if nothing else.
3. Create benefit designs to help employees find and incent them to use the highest-quality providers charging a fair price. Listen to EP334 with Sunita Desai for more on the topic of incenting consumerism.
4. Know how your broker gets paid. If someone is paying your broker a commission and it isn't you, then your broker makes more money when your premiums and rates go up. They are a sales rep getting paid to make someone else money off of you.
5. Get a handle on your pharmacy spend. David gets into some nuances here which are super interesting.