Convincing employers to abandon the status-quo of annual increases in favor of new and improved solutions is one of the biggest hurdles facing innovative benefits advisors these days. Often it comes down to a tipping point where the pain of the increases outweighs the fear of change.
But employers who continue to resist these new solutions are doing themselves a major disservice, one that could potentially bring down the entire employer-sponsored health care model.
“Our country is creeping—in some cases jogging and even sprinting—toward a government-dominated health care system,” former Florida Governor Jeb Bush said during his keynote at this summer’s BenefitsPRO Virtual Broker Expo. “The challenge is that those who believe in markets, choice and patient responsibility haven’t been offering creative 21st-century suggestions. Expanding Medicare benefits has become the norm, and there has been very little discussion about alternatives.”
Indeed, the drive for a government-run health care system has grown and will only continue to gain popularity—and not just among consumers. “If you ask companies today, should we expand Medicare and go to a government-run public option, a lot of them are a lot more open to it,” says James Gelfand, senior vice president of health policy for ERIC, the industry committee for ERISA. “It’s because of the health industry. They got greedy. They thwarted attempts to make reasonable, paced reforms.”
In the past year, for example, health care industry stakeholders have shot down attempts at surprise billing reform, resisted calls to bring drug prices down, and are currently challenging the pending implementation of the HHS’s price transparency rule. “What they have done is create a metric boatload of momentum for Medicare and Medicaid expansion,” Gelfand says.
The good news for those who would prefer not to see a government-run system is that there’s still time to step in with solutions to ease that pain. In fact, there might never have been a better time, due to increased pressure as a result of the pandemic. “COVID is this WWII-like period in terms of accelerating change, and things are fundamentally resetting,” says Dave Chase, founder of Health Rosetta. “To think otherwise is just naive.”
Whether that reset results in a government-run system or a reformed private system remains to be seen. But one way or the other, it’s becoming clear that our current health care system’s days are numbered.
Employers in the hot seat
It’s increasingly evident that the necessary changes won’t come from within the system. “So far, what we’ve been seeing is a complete circling of the wagon by the medical-industrial complex,” Gelfand says. “If the change won’t come from within, then it will have to come from without. Maybe we can do that, but those who want a government system have a lot of solutions if we can’t.”
Many have looked for a solution from the big names in disruption: Amazon and its Haven health care venture, Google, Apple, Microsoft—the list goes on. In addition, many smaller startups are looking to disrupt the system, from health insurers such as Bind, Sidecar and Gravie to consumer shopping tools such as GoodRx. Chase calls this “techno-Utopianism.”
“It’s just a sideshow,” he says. “If employers had done a good job, you wouldn’t need GoodRx. It delivers value, but if you actually had a functioning health care system, you wouldn’t need it. The first thing I learned as a new consultant is you fix the process, and then you apply technology. Health care is riddled with throwing technology on top of broken processes.”
There are some big names making a noteworthy impact, he says, though they’re doing so as employers. Amazon and Walmart, for example, have been in the headlines for their investment in primary care for employees.
Gelfand also notes the work employers have done with direct-contracting, Centers of Excellence and accountable-care organizations. “You can definitely find examples of companies that are really stepping forward,” he says. “But they’re designing this stuff themselves. This is not an off-the-shelf product that employers can roll up to insurers and say, ‘I’d like an ACO with a side of DPC.’”
To be sure, forward-thinking employers and their advisors have embraced several new strategies to bring health care costs under control and improve outcomes, though maybe not to the extent that will be needed. Chase describes it as the “rule of threes.”
“You have three employers doing something, and nobody notices, but you’re understanding the market, getting the right tools in place,” he explains. “Then you get nine and people start noticing. Some of the provider organizations start adjusting their processes. And then when there’s 27, it’s pretty much game over.
“It only takes 10% of the market to tip a market,” he adds. “The CEOs can’t keep their mouth shut when they’re spending 40% less.”
The clock is ticking
Employers and other disruptors have been slowly pushing health care delivery in the right direction, but time is running out. Some estimate that if the health care system can’t be righted within the next five years, we’ll be looking at a full government takeover.
“Inevitably, some of these decisions are going to move out of the hands of the HR department,” Gelfand says. “It’s going to go to the C-Suite. The CFO is going to look at those numbers and say, ‘If the government does this, it’s going to save X amount of dollars.’”
And while there are developments moving the industry forward, there are others accelerating its fall. The shortcomings of the health care system laid bare by the COVID pandemic are one example. Another, says Gelfand, is the advent of gene therapy and other high-price medical services. “Gene therapy is going to change many lives in a positive manner,” he says. “But the prices for some of these therapies are so insane that it’s also going to help unravel the system.”
Perhaps the biggest factor giving urgency to health care reform is the consumers who use it, a demographic that is currently undergoing its own major shift. “Millennials are the largest generation in history,” Chase says. “They’re expected to be 75% of the workforce by 2025—that’s not very far away.”
What’s more, Chase says, the oldest of the millennial generation are now in their late 30s and 40s and beginning to interact with the health care system in greater numbers—and they aren’t happy with what they see. “Smart employers will take this as a competitive advantage opportunity, rather than giving them their father’s Oldsmobile health plan.”
And if not? “That generation wouldn’t be pushing for Medicare for All if employer plans were doing a great job.”
Thus, as Jeb Bush noted during the conclusion of his keynote, “It’s extraordinarily important for businesses to stay involved in this. My hope is that creative solutions will lead the way to get back to a patient-centered health care system that is focused as much on preventing disease as reacting to it.”