Benefits Think

Changing broker mindset would remove huge obstacle to healthcare fix

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Changing the mindset of benefit brokers who are accustomed to all the misaligned incentives of U.S. healthcare is by far the biggest obstacle to fixing a perverse and opaque system that places profits ahead of patients. They measure their book of business in dollars or covered lives. It's easy to be tantalized by generous commissions and revenue-sharing arrangements with service providers. It's also hard to break with tradition — a reticence driven by fear of the unknown. 

Those who continue to resist change, however, actually run the risk of losing their employer clients. Corporate HR and benefit professionals increasingly expect transparent pricing not only on medical services for their employees in group health benefits but also the advice they receive. Under the Consolidated Appropriations Act of 2021, all direct and indirect compensation schemes for health and welfare benefits must be reported. 

There's no escaping the fact that market trends require advisers to demonstrate as never before their value and expertise, as well as knowledge of vendors and ability to verify the results of every activity. 

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One example of an adviser who decided to break from the status quo and implement a more thoughtful approach to health plan management is Bryce Heinbaugh, who was a traditional broker selling fully insured plans that saddled clients with endless price increases. 

When he eventually caught up with our organization, his transformation was impressive. During a relatively short amount of time, he transitioned clients into high-performance plans and has since been growing way beyond his old book of business. Starting with just a single employer with 38 employees in year one, he expanded to 535 covered lives the next year – a number that rose annually to 1,362, then more than 3,600, 5,000 and then an additional 10,000 outside of his community. 

Bryce hails from Ashtabula, Ohio, a typical Midwestern town that faced automobile plant closures. A familiar refrain dating back decades was that a $1,500 or $2,000 premium was added to the price of every General Motors vehicle brought to market just to pay for the health benefit costs of its unionized workers. Rather than solving the root cause of this problem, the so-called solution was shipping jobs out of the Midwest, and Bryce's town was one of those communities that was hit hard by that strategy. 

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But that was just the tip of a larger iceberg. Ashtabula also grappled with opioid addiction and medical-desert issues, as well as fewer than 30% per capita doctors available and 60% of school children on free and reduced lunches. 

Reining in rising healthcare costs went a long way to remedy these challenges. Bryce installed one of our recommended health plans in July 2020, and less than a year later the savings were substantial. More money was salted away than the entire proposed school levy that failed and would have sacrificed teachers, programs, transportation and extracurricular activities.

At the core of what we're sharing with more than 250 benefit advisers representing more than five million employees and over 15,000 employers is standards of excellence and resources that enable broad adoption of new market norms. 

To that end, we launched the nonprofit Nautilus Health Institute, which basically gives away our secret sauce. It boils down to helping plan sponsors with procurement, contracting and data – all of which we hope to transform by 2030. In essence, we're developing a new industry supply chain, and in order to do that well, gold standards are needed to remove friction and make it easier for employers to accomplish what they set out to do.

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The fact is that employers lack north stars for improving their plans, which can tie the hands of advisers when recommending strategies. It's challenging to navigate the multitude of complex and ever-changing topics or determine the best way to draft a request for proposal or ironclad contract, or measure return on investment.

The lesson for Bryce and other brokers who are willing to think differently is that there is a way to make a good living by aligning their interests with the client's interests. We're not asking anyone to take a vow of poverty. It's possible to do right by your client and community by following ethics and morality, which is liberating to those like Bryce who've been conflicted about the tepid results of traditional approaches. 

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