Friends,

This is a super interesting and fast paced dialogue about a topic that is poorly understood by most, including healthcare executives and policy experts. The topic is employee health plans. Our guest today, Dave Chase is a remarkable healthcare entrepreneur with decades of experience who has been one of the most brilliant thinkers and activists in reforming employee healthcare benefits. He and his colleagues at Health Rosetta have really unearthed the core underlying problems and are doing something about them. They do, in fact, have a blueprint that is replicable, scalable and sustainable; and they have numerous examples of success. Given that nearly 50 percent of healthcare is paid by employers, this issue has broad impact and significant implications for American healthcare and for the financial welfare of working Americans and their families. 

In this interview, we’ll discover:

1. To what extent employee health plans have been eroding the wages and retirement funds of working Americans for the past 3 decades.
   
2. The implications of the Consolidated Appropriations Act of 2021, which requires employers to be fiduciary stewards of their employees’ health plans.
   
3. The importance of understanding the legal documents of health plans as the untapped lever that can enable us to fix American healthcare.
   
4. The undisclosed revenue streams and incentives that are contributing to the outsized and unsustainable rising costs of employee health plans.
   
5. The “open sourcing” in hospitals, and in healthcare in general, that is needed to improve quality, safety and costs.
6. Examples of companies that have successfully redesigned their health benefits resulting in better health outcomes and lower costs for their employees.
   

Of all the opaque and confusing aspects of healthcare delivery, the legal agreements of employee health plans, may top them all. This wouldn’t necessarily be an issue except for the incontrovertible fact that what they’re hiding is literally decades of misaligned incentives that reward increased pricing rather than high quality care, positive health outcomes, cost effective pricing, convenient access and consumer-oriented navigation. What’s hard to comprehend is how many hands there are in the pockets of the American workers, siphoning off decades of hard earned wages and retirement savings. The irony is that these employer health plans benefit the insurance companies, third party administrators, health benefits managers, PBM’s, and hospital systems more than they benefit the employers or employees.  

And let’s be clear – this is not a minor issue affecting a small percentage of the population. This is a huge issue affecting the majority of working Americans. What we’re talking about is not being able to afford healthcare and having to forego it to pay for housing costs, food, clothing, child care and transportation. What we’re talking about are tens of millions of Americans who can’t afford preventive medical care, medications and much needed medical procedures.  Here are some stats that Dave provided – a sobering and alarming perspective on the severity and magnitude of the situation.

• Over 100 million Americans carry medical debt, which is one of the leading causes of individual and family financial ruin.
• Over 60% of Americans earn less than $60,000 per year while the cost for a family of four in an employer-sponsored PPO health plan in 2023 is over $30,000. This places healthcare insurance at literally 50% of earnings for the majority of Americans – completely untenable and almost mind boggling.
• Tens of millions of Americans are what Dave terms “functionally uninsured”. They have health insurance but their life savings are far less than the deductible required. To put some numbers to this, the majority of Americans have less than $1000 in total savings while the deductibles for an individual range from $1800 to $2400; and for a family of four, the deductibles range from $3600 to $4800.  What this means is that tens of millions of Americans are literally one ED visit or one hospitalization away from financial ruin. 

The situation is dire but there is some good news and positive momentum. It’s taken decades but it’s heartening to learn that regulatory policies and laws are finally beginning to protect employees. As Dave informs us, the Consolidated Appropriations Act of 2020/2021 will put the onus on employers as “plan sponsors”, but will also empower them by requiring transparency and prohibiting contract terms that harm employers and employees. The Department of Labor has been charged with enforcing the law and is already demanding documentation from employers. Plan sponsors will be required to prove to the federal government that they are good financial stewards of their employees’ health benefits, and transparently demonstrate to their employees that they are contracting for cost effective, high quality healthcare. From a political perspective this Act is supported by the previous Trump Administration as well as the current Biden Administration, and has the full support from both parties in Congress. I realize it’s a bit in the weeds but I think it’s important and helpful to share a a few examples of what this law requires (as in present tense):

• Removal of ‘gag clauses’ from service provider contracts, including health plans, third party administrators, consultants, brokers, pharmacy benefits managers, and any other entity involved in health benefits. No more withheld claims data other than privacy protected data.

• Reporting requirements for pharmacy and prescription drug prices.

• Disclosure of direct and indirect compensation from all service providers, so hidden incentive arrangements between brokers and plans or PBMs and drug companies must be fully accounted for.

• Parity between mental health and substance use disorder benefits and other health benefits. The Act establishes a vastly more stringent requirement around parity than employers are accustomed to, including significantly enhanced documentation requirements.

The title from a reference article by Leah Binder in Forbes.com (Feb 28, 2022) that I used in writing this copy really captures the current situation. “This Federal Law Will Completely Overhaul Company Health Benefits. Nobody Is Ready.”  Regardless of the short term compliance hassles and costs imposed on employers, this is a great oversight for employees and their families. It will not erase the decades of tremendous harm imposed on working Americans, but it will prevent harm for future generations.

Another complementary positive step is the work that Health Rosetta and others have been doing to create the mechanisms for improving health plan benefits. While the Consolidated Appropriate Act law is a forcing function, the tools that Health Rosetta has been developing are actually paving the path forward. As Dave states, “Our goal [at Health Rosetta] is to transform employee health plans from being the number one driver of inflation, poverty and bankruptcy to delivering what they should be: a driver of well-being and wealth”.  Dave goes on to make a foundational reframing point toward the end of the dialogue:

“… It’s weird that the way we navigate the healthcare roads from a financial standpoint is looking in the rearview mirror, aka claims. How about we look through the windshield, what are actually leading indicators of a high performance health plan? Over several years, what we found was, we could get at the best predictors. There’s about 40 questions that effectively diagnose a health plan… we have a score… and then we give a prescription for a care plan. Here’s how you fix it, here’s the proven approaches to that.”

Dave Chase and his colleagues at Health Rosetta have spent years studying what works and are offering that to employers and benefits managers. Their approach is replicable, scalable and sustainable as evidenced by the numerous case studies they’ve published and posted. It’s also the right thing to do for employers and working American families. There is no question about that. The only question is – ‘why aren’t more employers, payers, third party administrators, benefits managers and consultants adopting their approach?’ 

If you’d like to learn more and hear about their successful case studies, check out the health rosetta website https://healthrosetta.org and their upcoming annual symposium, https://rosettafest.org which is happening this August. 

Until Next Time,

Zeev Neuwirth, MD