Employer-Run Healthcare NOT Insurer-Run Healthcare
Employers need to stop paying the “BUCA” (BCBS, UHC, Cigna, Aetna) price for common medical procedures when the direct market price is often much cheaper.
Never let foxes guard your hen house. Because, instead of protecting your hens, the foxes will eat them the second your back is turned.
As silly as the idea may sound, the real world is rife with examples in business, politics, and in society at large in which there are fundamental conflicts of interest. Nowhere are these destructive conflicts of interest more apparent than in the healthcare industry.
"In response to the unsustainability of the existing system, many employers large and small are forging their path in the healthcare marketplace and either limiting their relationships with insurance providers or foregoing traditional health insurers altogether."
--- DR. CRISTIN DICKERSON, MD
One prominent example of a fundamental conflict of interest in the real world is the relationship between US traditional health insurers and employers. Make no mistake. In this metaphor, the foxes are the health care insurance agencies who have been tasked with guarding the chicken coop and we, along with all the fully insured businesses and employees, are the chickens.
The Fleecing by Health Insurance Providers
In theory, the nation’s private health insurance conglomerates are supposed to provide companies access to quality healthcare while simultaneously negotiating on their behalf. Health insurance companies are supposed to be leveraging their risk pools to negotiate favorable deals with health insurance providers and suppliers. Instead, they are colluding with providers and passing on inflated medical costs to their customers in the form of premiums, fees, and reduced coverage. Instead of protecting consumers, they are actively fleecing us to pad their profits. "Discounts" are not discounts if there is not transparent pricing, pricing escalates so their profitability is maintained or improved.
People vs. Profits
Therein lies the fundamental conflict of interest: people versus profits.
Even worse, the system as it is currently designed won’t allow victimized employers and employees to escape. Like hens, we are trapped within the coop by walls of regulation and fences of price opacity.
Without ethics and aligned incentives, there is no free market.
A Fundamental Conflict of Interest
In a sense, everyone has known that insurers have been a major part of the problem with America’s healthcare system, not a part of the solution.
Yet, for many decades, the health insurance lobby has successfully sheltered insurers from real change. Even when the Affordable Care Act (ACA), also known as Obamacare, upended the rest of the healthcare industry, the role of middlemen insurers never changed. In fact, many of Obamacare well-meaning but flawed regulations served only to increase the number of people forced to purchase third-party insurance plans.
Record Profits
Like the walls of a coop, the much-reviled “mandate” provisions of the ACA made it difficult for individuals and companies alike to avoid dealing with insurers entirely. Through effective lobbying and the allocation of funds to the right people in Washington, the health insurance agency was somehow able to ensure that their position would be stronger than ever under the ACA. Even while loudly exclaiming their difficulties with the ACA, these third-party payers and middlemen made and continue to make record profits.
As corporate entities beholden to a board and investors, it should come as no surprise to anyone that the insurance giants opted to pad their quarterly profits when given an opportunity to do so.
When handed government subsidies or a windfall of cash from new customers forced to purchase plans thanks to the ACA, insurers didn’t pass the savings on to consumers. Instead, they went on a mergers and acquisitions spree. They paid their CEOs and executives more. They invested in new buildings. They are buying medical providers and pharmacies. They have done everything under the sun except lower healthcare premiums for consumers or broaden access.
The Employer-led Healthcare Revolution
In response to the unsustainability of the existing system, many employers large and small are forging their path in the healthcare marketplace and either limiting their relationships with insurance providers or foregoing traditional health insurers altogether. This trend towards self-funding and negotiating directly with healthcare providers, including hospitals, is only accelerating.
Many Fortune 500 companies such as Intel, Amazon, JP Morgan, and Berkshire Hathaway just to name a few, have already adopted this model. Intel, for example, began on a path towards self-funding in late 2009. The company realized that while it rigorously managed it’s own parts suppliers and vendors, it did not rigorously manage healthcare providers and suppliers. More importantly, there was a growing realization that insurers themselves either couldn’t or wouldn’t manage costs.
As a result, Intel decided to do it themselves and apply the same kind of rigorous business analysis and management to the healthcare supply chain of their employees as they do to their core business supply chain. As a direct result of this epiphany, Intel’s pilot Healthcare Marketplace Collaborative (HMC) was launched.
Over a 5 year period, the HMC reduced the costs of treating some conditions by nearly 50 percent. More importantly, the traditional role of the insurer, in this case, Cigna, was greatly reduced and limited to providing statistical support rather than acting as gatekeepers.
Like Intel, Amazon, JPMorgan, Berkshire Hathaway, and other employers continue to seek ways to reduce costs by cutting out traditional insurance agencies altogether. Amazon, JPMorgan, and Berkshire Hathaway, which collectively employ 1.2 million employees around the world, have created their own in-house insurance agency that is “free from profit-making motives”.
By creating a nonprofit designed to administer access to healthcare and negotiate rates with providers, these industry leaders have effectively eliminated the conflict of interest problem that continues to dog traditional third-party insurance companies such as Cigna, Humana, Aetna, UnitedHealth, and Blue Cross Blue Shield.
This employer-led healthcare revolution has some sectors of the insurance industry shaking in their boots. Of course, large multinational companies such as Intel and companies of similar size have the resources and the employees to take on insurance giants.
What About Small Business?
But what about the little guys? What about small businesses, and even mid-sized companies who may not be able to strongarm providers at the negotiating table? Partially or fully self-funding can still provide significant cost savings compared to opting to fully insure under a conventional insurer plan.
The truth is, most employers do not and should not have to pay inflated negotiated prices for many common medical procedures, tests, and drugs. No employer ought to be stuck with a $5,000 insurance bill for an employee’s MRI procedure when the market price of the same MRI is $500.
Self-funding Health Care
In order to succeed with a self-funding health care model, employers must have more than 50 employees enrolled in their plan and make healthcare a priority. That means allocating adequate financial and personnel resources to the process of designing and implementing value streams. The process starts with claims analysis. Here in Texas, employers have access to their claims data by law (although getting that data can be like pulling teeth).
Moving to a Direct Primary Care centric plan, using an independent TPA rather than a BUCE, and direct contracting can cut costs to both the employer and employee by over 50% and provide better and more accessible care.
Small Employers
Employers with fewer than 50 enrolled employees, risk-averse employers, and employers "who could not previously afford" healthcare for their employees have great new options like a customized Lucent MD plan and can offer employees 24/7 direct primary care access, a direct care specialist network, and catastrophic care for $300 per employee per month.
Individuals and Families
There are great new ACA alternative plans for individuals with better coverage at half the cost like our Lucent MD Complete 365 plan.
Green Imaging: Helping Direct Care Practices in Texas and Beyond
Green Imaging assists Direct Care Physician practices, patients, and employers by providing quality diagnostic imaging services at rates well below that of traditional imaging facilities. Unlike other imaging facilities, the cash-pay price we provide is the final price you pay. There is no extra charge for the radiologist fee. You pay a flat fee for your procedures, with no surprise bill after the fact. No paperwork. No bureaucracy. No Surcharges. No problem.
