Meanwhile, Congress and stakeholders throughout the $2 trillion-plus health care apparatus are looking to Massachusetts as one of the top states for insight on how reform might play out for the rest of America.
EBA recently gathered a foursome of brokers — Bill Randell of Advantage Benefits, George Gonser of MDS Insurance Services, Chris Nadeau of William Gallagher Associates, and Steve Lukin of the HealthConsultants Group — from the proverbial "cradle of liberty" to talk about how the process played out for them locally and how it might play out for their professional peers on a national stage.
Q: Think back to when Massachusetts first began its health reform journey. How did you feel? We're you scared? Excited? Indifferent? Contrast that with how you feel as the national effort has been restarted and the prospects for genuine action elevated.
Chris Nadeau: I was initially concerned [because] anytime you put a government agency in a complex decision-making process, you want to make sure there are enough voices at the table. I was actually pleased with the process in Massachusetts. It truly was a bipartisan approach.
The brokers came in, we realized that we were not at the table initially but once we got in to the right folks and talked to them about the work we were going to have to do in this process they brought us to the table pretty early on. I felt good about the Massachusetts program. I came to understand that although it wasn't going to be perfect — that they didn't address the cost of care, they were really addressing coverage issues — they were all in it for the right reason.
I look at the federal approach very, very differently. Barrack Obama said a lot of things during his campaign that sounded good about universal coverage. This has become a very, very partisan, very nasty debate where I don't think most of the players and most of the decision makers understand the complexity of health care delivery and where the real costs are.
They've taken cheap shots at the private insurers because it's low hanging fruit for them and it sounds like corporate greed and we can cut out all these big salaries. Health care is really expensive. Medicare is the biggest problem in health care delivery in the United States today. And nobody on Capitol Hill wants to address that. I feel very differently about federal reform than I did about Massachusetts reform.
Gonser: I don't think I was scared. I was cautiously optimistic, cautiously excited. There is a lot to be worked out to this day. They've done some good things. They've done some things that need to be adjusted.
There is an opportunity for all of us, any broker. It means the cream will rise to the top and that those who really aren't into health care reform and doing what's best for the client, those people will ultimately fall by the way side. I do really honestly feel that the idea of health care reform in Massachusetts was a great and noble idea. I think that we still have some work to do to make sure it's the right move for everybody.
We still have to really understand how things have worked here in Massachusetts ... there are a lot of challenges that still need to be ironed out for them to consider this kind of model on a national basis. It's a little bit concerning. We need a longer timeline to make sure we work out all the kinks. I'm cautiously optimistic that hopefully they learn from the things that have been done well and the challenges that remain if they are going to do something on a national level.
Randell: My first reaction was very skeptical. They predicted a great health plan. That they were going to come out with a single premium in the $200 range, a family plan in $700 range. I remember a client saying to me, 'I can't wait for their connector plan coming out.' I said [that pricing is] not going to happen and it didn't happen.
The commonwealth thought there was a ton of waste [among the carriers] and somehow they would come up with this great plan. In the end, the plan has been basically what we've been selling.
A rollout on a national basis? I just think a lot of these government entities they believe somehow with their power and their clout they can save all sorts of money and come up with these premiums. In the end, I don't think they realize how efficiently these carriers do roll out these products.
Lukin :I do believe there are some great players involved with the Connector Authority. Kevin Counihan, chief marketing officer ... he listened to what we had to say. I attended a focus group [recently] in their office, addressing the group product that they are putting forward. He truly listens, and their staff listens to us and they feel that we will be an integral part of their success. I think that we need to be the distribution arm for them if it's going to be a success.
[Nationally] it's so political, so partisan. I don't know how they could put forward a system that's going to address the real issue, which is the cost of health care. And that in Massachusetts hasn't been addressed either — the cost of health care itself.
Q: No wonder the general broker reception to the Massachusetts effort seems to be favorable — more coverage is something that is very easy to support and it's an entity with fewer goring horns. But if Massachusetts hasn't tackled the cost side of the dilemma, is it ultimately a useless exercise? And what do you suggest lawmakers do to corral costs?
Bill Randell: I don't think it was a useless exercise. [I]f you ask people at the connector of Massachusetts, they feel it's been a rousing success. The initial goal was to insure as many people as possible. They achieved that — 97% plus, I think we're in that range. That's a wonderful achievement. The fact that 97% of all residents in Massachusetts have some kind of insurance coverage is really fantastic.
But this is what I'm concerned with on a national basis. They've got to address the cost issue. I think maybe there was a little bit of a disconnect on the coverage versus cost issue. And now they are trying to play catch up on how do we handle these cost issues. We went to these advisory meetings with the carriers. They are struggling to hit the targets that the state is trying to set and, ultimately, I'm concerned that down the road because of the cost issue, the fact that we don't have that under control, the premiums will continue to go up and people will continue to downgrade and we'll have basically low-end coverage for everybody. That doesn't help anybody either.
[As for controlling costs,] I will tell you I really do believe that a nationalized record-keeping system, that's my personal opinion. A national electronic system would be a great backbone to really jumpstart this whole program on a national basis.
Nadeau: I do think Massachusetts was flawed in [not] looking at the cost. I'm not sure what Washington is trying to accomplish anymore. I truly believe whether it's a state-run model or a federally-run model, it's all about appropriate reimbursements. It starts with Medicare. I do believe there is a place for federal government and federal oversight within private industry and I think it has to be about outcomes.
Carriers have tried for over 10 years to build these databases of best practices, tried to make end consumers a good user of health care by knowing which hospital has the best outcome. Whether it's a hospital association or the physicians association, they have blocked this every step of the way. I would like to see mandatory outcomes and the carriers or the federal government be able to build reimbursements on facilities that provide the best outcomes for the patient. There is so much waste and excess in our system. Whether it's Medicare or the private system or doctors and hospitals that are reimbursed on reputation that have absolutely nothing to do with their outcomes.
Gonser: [Massachusetts] didn't address the cost, it just worried about getting as many people enrolled as possible. So you're right, 97% is a great thing. Let me give an example of something [that might help control costs].
One of the connector plans [is] called Commonwealth Care. It enables people to get a highly subsidized premium, a great plan at a very, very low cost. All they ask is income questions. So there are a lot of cash businesses that qualify for this subsidized plan, a great plan that they pay basically nothing for. It doesn't ask any asset questions.
Self-employed plumbers, electricians, pizza-place guys, [they] can be rich guys, have houses, but they can pay basically nothing for their health insurance.
One of my suggestions would be to add an asset question to the Commonwealth Care component.
It's a huge hole in the system right now. [If you're] under 300% of the federal poverty limit, you qualify for this plan.
Lukin: I believe [in Massachusetts] they did a lot of good with the people that they have covered. They have great people that work for the Connector. They really are listening to all people, brokers, insurance carriers, consumers, focus groups in all areas. They have built an OK product and they recognize the flaws. But hopefully with the help of us, the professionals in our industry, we can help them in the process of success if we continue to work at the state level.
A suggestion [for controlling costs] that Charlie Baker, president and CEO of Harvard Pilgrim Health, has been pushing for years is transparency.
People, employees and employers getting involved in the types of plans that we're selling now — deductible-based plans, consumer-driven health plans where people are getting explanations of benefits — are seeing how much things cost. I had a colleague in my office. His son went to the emergency room for a broken ankle. A month later, they got an explanation of benefits that said that visit was $7,500. A few exams, a couple of doctors, it's crazy.
It goes back to where we were 20 years ago, a $15 Band-Aid, a $20 aspirin. People are starting to recognize, 'Now I know why I am paying these high premiums. Look at the costs here.' That could be one of the solutions, along with medical technology. We're certainly willing to sit at the table and try to help put solutions [out there] and listen to other solutions as well.
Q: But does anyone in Washington want to listen to the adviser community's suggestions and solutions? More to the point, does anyone really care if the advisers make it through the reform process? Does anyone have your back? Do the carriers? What about your clients, not to mention their individual workers?
George Gonser: The carriers are definitely working with us a lot better. That's been an evolving process. I think they thought for years they could do it better without us and when that failed and they realized that the brokers were essential in the insurance and health care delivery system [and they learned] they have to lean on us that it's become much more of a partnership, definitely.
I work in a different environment in a lot of ways than Steve and Chris, but our clients depend on us and constantly tell us how much they are relying on us and how much they appreciate our services. Because it's not just selling insurance, it's the service that we provide that really helps them out and allows them not to have to hire a fulltime employee. We save them money on that side, so they definitely appreciate us.
Randell: I don't know who has got our back. I think the insurance companies [have] our back. I think they realize with the number of products they are selling right now, I think insurance companies know that brokers play a valuable role.
But I don't know how much our employers, when push comes to shove, I don't know much they are in our corner.
Insurance companies realize the role we play, I truly believe that. I wonder sometimes if our employers do ... I really don't know.
Nadeau: One lesson we've learned in Massachusetts is very early on the employers said, well if it's a cheaper product we'll take a look at it. There were no employer groups saying make sure the broker's commission is built into that. That being said, once that Massachusetts product got rolled out and there were all kinds of requirements around fair share contributions, non-discrimination rules, minimum credible coverage ... We did all that for free. We weren't getting paid anything additional.
If you see us as an outsourced operation of a typical company absolutely they see us as invaluable, and on the Massachusetts product we did more work, our clients were calling us in a panic because they thought they were going to pay all these penalties and be on the hook for non-covered employees.
The carriers value us because we take a lot of work off their plates. We do a lot of the enrollments, fixing bills and eligibility and that type of thing. I think credit in the United States for our health care delivery system falls squarely on the shoulders of brokers and consultants across the country. We keep these carriers cutting edge. We keep them honest anytime their prices get a little fat, their administration gets a little robust, their reimbursement models are out of line. We're marketing those programs, we are always pushing those carriers to provide our clients the best service to their employees, the best plan designs, the best network. If there is a flaw in their plan design and they are trying to screw our clients out of a certain type of coverage, we're there. We read the contracts. We know who's good and who's not. So, if you look over the last 15 years of health care delivery in the United States, there's a lot of problems, but the carriers have become pretty cutting edge because they know if they're not we're going to move their product to another carrier.
Lukin: Especially in the last couple of years, especially in Massachusetts and now with the new stimulus package, our role has become even more appreciated than ever. Our clients have been leaning on us. We've been very proactive in providing data, information and communication to all of them in regards to all these different changes.
Q: Many of you say you are concerned about the national health reform. Are you factoring a reduction in the health insurance side of your business? Do you have a plan for dealing with that revenue reduction?
Steve Lukin: We've been reinvesting more into our agency as far as technology. We've revamped our customer service, member service software systems, hired more people, started a wellness program. We have a registered nurse [and] attorneys on staff. We're trying to do everything we can do to be more valuable and provide more services to our clients and their employees. We recognize the fact that our revenues are probably neutral. We're certainly working harder with less revenue.
Q: Are you baking all your additional services into the commission or are you charging clients separately for those offerings? Do you think they would write a check for that kind of help?
Lukin: I would say no.
Q: Is that a bridge you — your industry — will have to cross at some point?
Nadeau:Clearly a commission-based program is easier to fund, because it's kind of baked into their rates. We have plenty of clients where we have to line item everything we do for them. They do the math on what it would cost them to outsource that ... or hire professional staff internally. They certainly see the value. For small companies it's going to be a little bit more of a tougher conversation.
Gonser: We've differentiated our product line over the years. We've expanded products. I think that is definitely a smart move. I've built in an increase in revenue and growth for 2009/2010. I'm expecting to write more business, and not only on renewals, but also growth targets. I am looking for other products and services to round out the portfolio. Always looking for things to be innovative and creative. I'm very comfortable with our service model, that we provide excellent service for our clients and we update them and educate them as much as possible. All of us have to, we all have to be concerned about this long term, but I still think the brokers will always have a very significant role in health insurance. So, we're expecting to expand in the next year.
Randell: Revenues, thank God, are going up. The only thing I've noticed with all the change in health care is it's just a lot more work for the revenues. The filings, the answering questions related to all the COBRA [developments]. Revenues are going up, but the time and cost to service our clients has gone up also.
Nadeau: We've been talking to our clients really for the last five years about what we call the defined contribution approach. We think the decision needs to be in the hands of the individual. You've got baby boomers that are looking for different insurance products than the 22 year old. Buying everybody two times salary for life insurance doesn't make sense. Our long-term projection, whether there is national health reform or not, is we need to reach down into those individuals who may need long-term care insurance or maybe not, who may need life insurance or maybe not. Disability programs are woefully under funded for top executives and a lot of group plans don't cover that. A lot of executives don't realize it. Our role is going to be about personal responsibility and personal choice of the individual employee, using the employer to vet out what are the best products for them. We're talking about a voluntary world, using technology to reach individual employees, letting them make decisions on health care that the company offers, but doesn't necessarily fund at 100%.
Q: While you four seem pretty calm — maybe even stoic — about the prospect of imminent and significant national health care reform, the Zeitgeist at the national level is decidedly more fearful. Do you think that level of concern is appropriate?
Gonser: It's proper to be concerned, yes. Early on in the Massachusetts health care reform models, the legislators were kind of anti broker, and Kevin Counihan and Jon Kingsdale, they jumped to our defense because they came from the broker/carrier side and they knew how important our role was to facilitate any kind of health insurance or insurance product or service. I don't know if on a national level they have our back. That's one of the questions you've asked. I wonder if they really appreciate what a broker really does for the average business and the average individual out there. That's a concern with me.
Randell: It's proper to be concerned,yes. [But I also] think maybe it's a little overblown.
Nadeau :Don't trust their intentions. I think in Massachusetts I trusted what they were trying to accomplish. I think this is a big government grab of the GDP.
Lukin: We certainly would be naive if we weren't skeptical. I don't know if fearful would be the proper word. We know where we are, we know Massachusetts. We know the players. It's a lot easier to have an opinion and have feelings about where we think things are going. On the national level, I'm very skeptical because I don't know what their interests are and I don't think their ... intention is as noble as they say it is.
