Episode #172 The Perverse World of Employee Health Benefits & How Change Might Be Coming – with Chris Deacon, J.D., founder of VerSan Consulting & former Director NJ State Health Benefits Program

There are over 160 million Americans who get their health benefits through their employers. Nearly 40% of all healthcare expenditures in the U.S. is paid for by self-insured employers. For decades, these benefits have been mismanaged – contributing to unsustainable costs and suboptimal health outcomes; and leading to a prolonged wage stagnation and suppression for working Americans and their families.

Our guest on this episode is Chris Deacon – a distinguished consultant and legal expert in employer-sponsored healthcare. Chris has dedicated her career to advocating for cost-effective strategies that benefit employers and employees. Her leadership at VerSan Consulting, LLC is marked by innovative solutions that have significantly reduced healthcare expenditures. Deacon’s tenure at the New Jersey Department of Treasury was notable for implementing healthcare cost-saving measures exceeding $3 billion. Chris honed her legal and regulatory expertise as Deputy Attorney General and as Special Counsel to NJ Governor Christie. Deacon is a Rutgers Law School graduate with a BA in International Affairs from The George Washington University.

Under ERISA (the Employee Retirement Income Security Act of 1974), self-insured employers have had a fiduciary responsibility to optimally manage healthcare benefits on behalf of their employees. However, there was limited transparency and enforcement, which made this regulation insufficient to protect employees. The Consolidated Appropriations Act of 2021 (CAA) created greater accountability and more specific obligations targeted at self-insured employers that gives us some hope that things could be changing. Chris points out two important parts of the CAA:

1. Broker/consultant compensation disclosure will require that benefits brokers and consultants disclose all the direct and indirect compensation they derive from their employer clients.
2. The requirement that employers attest that they’re not a party to any contracts that limit their access to their own health plan data.

Learning about these provisions may cause you to ask what type of direct and indirect compensation have health benefits brokers and consultants been receiving? We’ll hear more about that in the interview. I suspect you’ll be surprised to discover, as Chris puts it, “… the way that employers have been purchasing healthcare absolutely rewards brokers and consultants when the [healthcare] spend goes up.”

As one discovers more about how healthcare benefits have historically worked and the negative impact it’s had on working Americans and their families, it’s easy to recede into despair.

The CAA of 2021 brings cautious optimism to the situation. Its goal is to assure us that self-insured employers will be held accountable for protecting their employees health benefits. We’re already beginning to see this accountability play itself out with a number of legal actions, including a large class action suit brought against J&J.

What we’re beginning to witness here is similar to the legal tidal wave of reform that swept across the country transforming the responsibility employers have for their employees’ retirement funds. It was a bitter battle, but in the end, working Americans won. I am hopeful that we will see the same resolution this time around – rewarding employees and their dependents (aka American families) with affordable health benefits.