Employers spent an estimated $738B on health benefits covering roughly 170 million Americans in 2018. Half of US employers use a health insurance broker to put together a package of health benefits that will best suit their employees. Tony Robbins does an Unshakeable job of analyzing the ways individual American consumers should be shopping for fiduciaries in the financial advisor sphere (Hint: RIAs). In the healthcare benefits space, there is no face of the franchise for employers to follow when they are doing their due diligence on whether their healthcare broker follows a suitability or fiduciary standard. However, there are organizations emerging and benefit delivery strategies creating market pressures on insurance companies to follow fiduciary vs. suitability standards.
The reality is there is no free market in most of healthcare: a combination of regulations limiting supply, concentration of providers in local markets, and consumers’ lacking confidence in their ability to choose medical services gives healthcare operators tremendous power. That said, shopping for and managing health benefits is one of the few areas employers can build durable competencies. Having an emergency appendectomy while on vacation in Mexico doesn’t really offer that same luxury.
As with previous posts, the systems and incentives that governor how health insurance brokers are compensated drive the bus. ERISA was constructed as a means of standardizing how pension plans are administered and regulated. The Dodd-Frank Act was a sweeping over-haul of the financial sector post-2008. Even the people (healthcare providers) providing healthcare services have checks and balances in place to deter unsavory business practices. Thank you, Stark Laws. Healthcare is still a business and deterring organizations from reducing referral leakage is similar to deterring an account retention program in the vendor world. That’s not good for business. And in theory, Clinically Integrated Networks(CINs) make a ton of sense for patient outcomes and cost containment!
While debating the impact of these or any laws is always a lively discussion, the bottom-line is that these types of legislation are deliberately addressing conflicts of interest. More importantly, these types of consumer protections should be inherent within the process of employers selecting health benefits. For example, health insurance companies can impose fees upon health insurance brokers due to referral leakage within their customer base (employers). This article offers some perspective on how the health insurance system can be constructed and the reasons that a health insurance broker wants to retain their customers within their current benefits packages at all costs. The anecdote of the real-estate agent representing both the buyer and seller is not off-base regarding the business models of certain health insurance brokers. Incentives, baby!
The 750,000 workers that organizations like Haven represent have the clout and critical mass to shift how healthcare is delivered across large employer-sponsored beneficiary populations. Organizations like Haven are providing our nation a petri-dish for employers to contract for healthcare benefits in the 21st century. As evidence, 60% of self-funded workers in the United States are covered by self-funded insurance premium pools as of 2017 and migrating towards contracting directly with healthcare providers as shown in Figure 10.1:
Self-funded insurance pools and direct contracts with healthcare service providers are just a couple of the ways that employers can reduce the aforementioned conflicts of interest when dealing with their health insurance brokers.
As for the non-Haven employers of the world, improving literacy on the best practices for evaluating healthcare benefits will create material impact to a lot of small to medium sized firms bottom-lines. As the above info-graphic suggests, significant opportunity exists in getting the left-side of the employer by size distribution curve to better health benefits literacy and to allow purchasing power to trickle down. Small to medium sized businesses are the lion’s share of businesses by volume and represent a significant portion of the employed population in the United States.
Figures B and C highlight why U.S. employers are re-evaluating their health benefits strategy:
Similar to the due diligence that Unshakeable calls for, Health Rosetta has developed a playbook to make sure an employer’s health insurance broker puts the company’s interests ahead of theirs. They even have a formal certification process that health insurance brokers can go through to become a certified Health Rosetta agent. For some perspective, it’s estimated that only 110 out of 100,000 health insurance brokers in the United States were Health Rosetta Certified at the time of that article (February 2019). Early adopters are the visionaries anyways!
Amongst those 110 brokers though are organizations like EPowered Benefits, Employee One, and Bernard Health. They are some of the early birds buying into being a fiduciary of their client’s health benefits selection process. With healthcare being the #1 employer in the United States, our healthcare spending per capita at 2x any other OECD country, and patient outcomes not keeping up with our spend, let’s posit the opportunity for disruption in healthcare benefits spend is ripe.
The question becomes, who can pen a New York Times best-seller outlining the blue print for employers to work with fiduciary vs. suitability standard health insurance brokers? And just as important, who can do that and have the clout of a Tony Robbins to get consumer protections put in place for employers as they choose their benefits packages? For now, check out Health Rosetta’s website, certified agents, and disclosure forms to help verify that your health insurance broker follows a fiduciary vs. suitability standard.