Welcome to the Bringing the Human Back to Human Resources
podcast. I'm Tracy Chernoff, and I've
spent my entire professional career in HR.
Each week, we'll explore the delicate balance between people
and business with the aim to reconnect the two and create
meaningful outcomes. Listen in as I share my own
experiences, challenge the status quo, and chat with guests
from various industries about our mission to bring the human
back to human resources. Hi everyone, welcome back to the
Bringing the human Back to Human Resources podcast.
Thank you so much for being here for another week.
Don't forget to rate, review, subscribe, share it with a
friend, do whatever you've got to do to amplify the podcast and
my fabulous guest that I have on most weeks because we appreciate
it and thanks for being here. So this week we're talking about
very riveting topic, which kind of all comes down to insurance
and benefits and, and things that really impact people very
deeply and companies very deeply.
And so to talk about this, I have Chris Hamilton ON who is a
partner at Hotchkiss Insurance in Texas, where he leads the
employee benefits consulting practice.
He specializes in managing healthcare and insurance costs
to improve benefits coverage, reduce expenses, and enhance
employee health outcomes. With over a decade decade of
experience in corporate finance, Chris has advised clients across
various industries, including private equity and oil and gas.
And in his free time, he enjoys traveling, working out,
attending live music events, and of course, spending time with
family. Chris, thank you so much for
being here and for joining the podcast.
Yeah, Tracy, thanks for having me.
Pleasure to be here. Of course, of course.
Well, I had shared this with you right before we started
recording that we are recording this episode effectively at the
end of my my companies like where I work full time open
enrollment period. And I had shared that this open
enrollment and this particular cycle, we were met with
significant increases in insurance costs for various
reasons. Of course we, you know,
companies generally see this, you know, the, the cost of
healthcare if someone, if people on the team are really sick or
you know, require a lot of continuing continuous medical
attention, for example. So naturally that's a thing.
And I'm also aware that across the country healthcare premiums
and insurance premiums have risen quite significantly.
I think the website correct keep me honest here.
I think it's like healthcare.gov or something like along the.
Exchange. Right, exactly.
So we can see that this is not unique to my employer, but that
this is something that's generally happening or happened
for 2025. So I am most curious to
understand from you how employers kind of interact in
these moments because it puts so much pressure on the employer to
figure out like, what is their funding strategy?
How do they do the right thing? Do we need to switch to
different plans in order to give employees the best benefits
possible while not, you know, breaking the bank, so to speak?
I mean, when we're talking about, I mean, I think most
people know that payroll and benefits are like the most
expensive part of running a business.
And if someone, if a company has like AI don't know $5,000,000
cost on their healthcare premiums, like when you go up
50%, I mean you're talking about millions of dollars.
So I'm curious about your perspective on that.
Yeah, I mean, there's a lot to unpack there.
I I will say for any employer that's listening to this, this
was a really painful year for most employers nationally.
A lot of the surveys that have come out have have given the
national average increase of about 9 1/2 to 10%.
And just to put that into perspective, this is a really
hard market, probably the hardest market we've had for
cost increase in the last 15 years.
And there's a number of things that attribute that to.
But what I would just say from what the employers that we work
with and we have clients primarily in Texas, but we do
business across coast to coast. Most of the midsize employers
out there, and that's employers that have 100 to 2000 employees,
they're not seeing 10% increases on average, they're seeing
closer to 20. And it's this convergence of a
number of things. One, we're coming out of this
post COVID economy, if you will. And if you look at the cost to
operate hospitals in particular, on average, it's about an
average operating cost increase of about 10% a year.
And when you look at what Medicare, Medicaid and other
government programs are reimbursing hospitals, it's not
keeping pace with that operating inflation and you can't
negotiate with the government. So where can these hospitals
negotiate with? Right.
It's commercial insurance. And it's the blue crosses,
United Health, Cigna's and Aetna's that all the employers
nationally are buying into. And so they're seeing increased
cost demands from hospitals. They're leveraging out higher
reimbursement rates. And what people need to
understand is the more we're paying for healthcare inside of
hospitals and prescriptions and doctor's offices, insurance
costs have to rise to cover that and provide a profit to the
insurance companies. OK.
And so you're seeing this fight happen coast to coast, where in
big cities you'll have one of the major hospital systems that
threatens to drop out of network with one of the insurance
carriers. Well, the insurance company at
the end of the day, whether it's United Health or Cigna or Blue
Cross, they need that hospital system and network, otherwise
they risk losing employer groups.
So at the end of the day, they're going to come to some
sort of agreement where they're going to agree to pay the
hospital what they want because the hospital has leverage in
that situation. And what it ultimately results
in is higher costs to those that are on that insurance plan.
And the reason why you're seeing this now because COVID has been
somewhat in the past, you know, over the last couple of years,
but these contracts are multi year agreement.
So they're now coming up for renewal and hospitals are
demanding higher pricing. You're seeing that being passed
on along with just this overall confluence, if you will, of
large claims that are happening nationally that insurers have to
help cover. So there's a number of things to
address this. I mean, I would say the first
thing that most of the employers that we see, they're looking at
alternate ways to structure their insurance benefits.
As you mentioned, it's a really important cost, not just for
operating a business, but for retaining and attracting the
talent. We're in a talent war right now.
And so a couple of things to keep in mind is, you know, how
does an employer's benefit, not just the coverage, but the cost,
how does that compare to their peers?
And I talked to a lot of employers that are mid size all
the way up to national publicly traded companies that don't
really look at what is it that we offer and how does it compare
to where we're trying to pull and retain talent from.
And so that's kind of the first step.
The second step is how do we design our insurance?
And most companies are used to buying insurance through a
broker with one of the big traditional insurance companies.
So name any of the ones that I just listed off.
And part of the issue that we see with that is that the big
insurance companies, it's the way they make money, it's the
incentive. And I think, you know, Charlie
Munger, Warren Buffett's right hand man, once said, show me a
man's incentive and I'm going to show you the outcome.
And if you look at the incentives that insurance
companies have, they don't have the same incentive that you or I
do or a business owner or HR leader listening to this.
They don't have the same incentive that we do, which is
to offer better coverage at lower cost.
They actually have the opposite incentive to see costs go up.
And in fact, they participate in those cost increases.
And it's one of the problems that we see with insurance
today. So the the first piece of advice
that I give to HR leaders and executives that are looking to
tackle this particular issue of what does it cost and how do we
provide better coverages? How does your insurance company
make money? Where are there misaligned
incentives and where are there inflated costs that you don't
see? We have to uncover those.
And so I would describe it this way, if we're paying $1000 a
month for a medication and this is a life saving medication that
the member actually needs, like that's really important.
We want to make sure that that's covered.
But what if you could get that same exact medication, the name
brand and everything, and it was only $300 a month?
That's a 70% cost reduction. And how many of those
occurrences are happening inside of the plan that we have?
If you can ring that waste out, you can reduce the cost of
health insurance and keep the coverage the same.
And what many employers are figuring out is if we're able to
do that exercise and it works effectively, wow, we could
actually increase the coverage that we have for the same cost
or even still reduce costs. There's there's that much waste
in the system. And so I'll, I'll kind of go
back to how insurance, traditionally insurance
companies are making money. There's a provision in the
Affordable Care Act that limits the amount of profit that an
insurance company is going to make at the insurance holding
company level, which makes sense.
We don't want insurance companies taking our premiums,
denying all of our claims and making a really fat profit by
doing it right. That, that makes a lot of sense.
If they're going to take our money, they should be obligated
to pay a certain percentage of it for our healthcare.
Well, the unintended consequence of that is these companies are
publicly traded. And if you're the CEO and CFO
sitting around the boardroom thinking, how are we going to
show a return to shareholders? We've got to figure out how do
we get the, the, the pie to grow so that our 15% because every
year becomes a bigger number. So the immediate incentive is
how do we get premiums to spiral upward so we can take 15% of a
growing number is 1. And the second thing that these
insurance companies have done, and this isn't new, but it's
really accelerated since the passage of the Affordable Care
Act is they've become vertically, vertically
integrated, which means if you look at any of the insurance
companies, they own their own PBM, the pharmacy benefit
manager, it's simply a middle man that's setting the
contracted price that insurance companies pay for drugs.
But that's a mechanism that they use to shield profitability
that's accepted from that 15% profit margin they're allowed to
make as an insurance company. So they've, they've done that.
They now own physician groups, facilities, clinics, pharmacies,
specialty pharmacies. So they're, they're very
vertically integrated. And those entities that kind of
sit as subsidiaries systematically overbuild the
insurance company to show that they're spending money
overcharging our businesses and overcharging our employees and
members. And at the end of the day, they
come back to an employer and say your loss ratio or your claims
utilization is high. Therefore, we need just this is
justification for us to increase your premium.
But if you're to pull each of these companies filings, they're
10 KS and 10 QS, you're looking at quarterly and annual data.
If you look at where their revenue and profitability is
derived, it's almost primarily from the subsidiaries, not the
insurance companies. So the insurance companies will
run lean. All of the money is being
captured in their verticals. And so the thought that these
insurance companies would have, and I'm rambling here, but this
is really important for people to understand, is vertical
integration is not necessarily a bad thing.
Think about Amazon As for example, the value prop to them
is to be able to deliver something in your doorstep same
day or within two days. They used to rely on FedEx, USPS
and UPS, all that money that was being captured as profit to
those entities, they were able to ring that out by building
their own shipping fleet and the value is now passed on to the
customer. Insurance is the opposite.
The value that's created by this vertical integration is captured
for shareholders. And you can see it in two ways.
One, their profitability and their stock price continues to
climb. And two, the end user, the
customer cost continues to climb as well.
So I would argue that that vertical integration is actually
for the benefit of shareholders, not the membership.
And the insurance companies fiduciary obligation is to
shareholders, not the members. So once you understand how the
insurance companies are designed and how they make money, the
question then becomes as an HR leader and an executive is, OK,
we understand that mousetrap. Now how do we get rid of those
conflicts of interest and misaligned incentives?
And how do we design a plan where everybody's actually
aligned with the goals that we have, which is top tier
benefits, the best coverage possible at the best possible
price. And that's usually where we
start that conversation. That's really, really helpful.
I have so many questions coming out of what you shared and I'll
try not to throw them all at you at once.
The first question is kind of going kind of back to what you
were saying around like understanding the goal of an
insurance company. And I've seen your Tik Toks,
I've seen the one that you you kind of went viral with with the
urgent care. And I saw a lot of the comments
where people are like, insurance is a scam.
And of course, this is the widely held belief and one of
the questions that I have is kind of around what really helps
Dr. profits for insurance companies.
Is it maybe let me back backtrack for a second.
The, I think most people say, at least this is what I read a lot
online and, and just, you know, kind of see in terms of people's
skepticism over insurance companies, which I'm not saying
they shouldn't be skeptical. I'm just saying this is
generally the the vibe is that insurance companies want us to
be less healthy because then they make more money and that
the more we require coverage or the more coverage we require,
the more we need our insurance, the more money they make.
I have family and loved ones who work in healthcare, doctors and
others. And they say, well, no.
And there there is a a second question that I have here.
So I'm glad that I saw that you were writing something down
because I'm going to probably throw a couple of these at you
at once. But they sometimes say, well,
yeah. However, insurance companies
make more money when people are paying high premiums and not
getting sick. So when people are healthy or
healthier, insurance companies are making more because they're
not, they don't have like these crazy costs of coverage.
And that's why you see, you know, benefits like gym
reimbursement and things like that in insurance, which
arguably $200 a year is not a lot.
But when you add it or multiply it by hundreds of thousands of
people, that obviously adds up. So that's the first question is
like, what actually makes insurance companies money?
And the second question that I have here for you is actually
around the healthcare side and the healthcare provider side,
because I, I have, you know, loved ones in healthcare, they
often say that they're in the last like five years or so,
maybe even in the last three or a little bit more.
There has been a huge reduction in reimbursements to healthcare
providers from insurance companies and it's forced
healthcare providers to join hospital networks rather than,
you know, retaining or remaining in their private practices.
And so one of the thoughts that I had as you were sharing all of
this is, is there, and maybe you don't know the answer to this,
but maybe you have a belief, is there a correlation between
insurance revenue and being like really focused on hospital
networks? Because they have, you know, all
of these, they, they, the X-ray machine is there, the CT scanner
is there like everything is there versus private practice
where maybe costs are a little bit lower for some people, you
know, it, it, I could see it varying.
And so insurance companies potentially have this like
underlying motivation to see everything exists in hospitals
rather than seeing, you know, greater reimbursements for
private practicing physicians or healthcare providers because
maybe they're able to keep costs slower and that impacts the
insurance company's bottom line. So this is, these are, these are
two questions. I know they're big questions so
feel free to break it down, but I couldn't help but ask that I.
Have like a bazillion thoughts on all of this because you're
asking the right question in questions.
These are the questions that HR leaders and executives should be
asking. And because what you have to
really understand two different things.
There's an insurance, health insurance, and then there's
healthcare. We often confuse them as one
because health insurance pays for healthcare, but Healthcare
is a completely separate business than health insurance.
So let's talk about the healthcare side first because
this is what drives the cost of health insurance.
So your question about independent practices versus
hospital systems, hospital systems have in, in this is
happening everywhere in the country right now and it has
been since the passage of the ACA.
What you're seeing is hospitals have purchased other hospitals.
So they've consolidated, they've done something similar to the
insurance companies where they have vertically integrated.
Because if you're a hospital, you, you're, this is the brick
and mortar building that people walk into.
How do we get the patients in the door of the hospital?
You've got to have steerage. So the, the pitch was, you know,
the Affordable Care Act and electronic medical records and
compliance is going to be really difficult and expensive for you
as an independent provider to do this.
Join our hospital system. We'll take care of that for you.
We can give you referrals. You give us referrals.
And So what you've seen is hospitals have purchased other
hospitals, they've consolidated, they've purchased primary care
physicians, specialists. So the OBGN, the oncologist, the
dermatologist, they're purchasing all of these
providers, they're building physical therapy clinics,
outpatient surgical imaging facilities, all to create a
single ecosystem so that no matter where somebody goes in to
the healthcare ecosystem, they've got a solution for it,
which it makes a lot of sense. There's continuity of care,
there's simplicity of medical records and those sorts of
things. But what you see happening is a
member may not go to a primary care doctor.
They may just go straight to an orthopedist with a knee injury.
Since that orthopedist is owned by a hospital system, they're
directed on where they're dictated to essentially where
they can send patients. You work for us.
When you order an MRI, you're sending it to a hospital owned
facility that we own. And when that surgery needs to
be conducted, performed, you're going to do it inside of our
hospital. And all of that results in a
higher cost because what's happening with the hospital to
the insurance company, they're now, I'll call it just the too
big to fail theory. This is back from the financial
crisis where the banks were too big to let fail.
I'll call this on the insurance spectrum.
It's a too big to not allow. And that is we are the big
hospital system. We're the £800 gorilla in New
York City or Houston, TX or LA, California.
You can't afford to not have us in network.
Therefore, you're going to pay us what we need and we're going
to do everything inside the walls of our ecosystem.
And ultimately what you see and we call this side of care, you
see this everyday a doctor since we'll stay on the orthopedic
condition side. So somebody has a knee injury
that orthopedic needs to order an MRI.
Sending that to the hospital for that MRI is about in my market
it's about 2500 dollars, 15125 depending on if it's got
contrast or not. So let's just say $2500.
But if they were willing to go to a free standing imaging
center, same MRI machine, they're all made.
There's only a few makers of those machines.
It's all digitally transmitted. That image can be shot, sent to
the orthopedic doctor. You can get that same image for
four or $500.00. So if you are a provider of
benefit and HR leader and you understand that the cost of
Healthcare is going to drive the cost of your insurance, do you
want to? Help your member get the $500
image that's the exact same quality because you can provide
five of those images for the price of 1.
So side of care becomes an important issue and there's ways
that you can design a plan to incentivize people to have a
choice. But that's really what's
happening on the the healthcare side.
Just to give people kind of a little flavor.
What's happening on the insurance side?
To answer your question about how insurance companies are
making money, it makes total sense for any business leader.
Revenue minus cost is profit, right?
But insurance math doesn't work that way.
So for an insurance company, their profit margin is capped
for this. When we're talking about large
employers and by law large employer is identified as
somebody that has more than 50 full time equivalent employees.
So that's what we're talking about.
South, an insurance company that has a block of business
nationally with large employers has more than 50 employees.
They can only make 15% profit margin.
So that's revenue of premium, all the premiums everybody's
paid in minus all of the healthcare costs.
If they make 16%, seventeen percent, 18%, which this
happened during COVID because people weren't using insurance
because facilities were closed, they have to return that premium
back to the policyholders, anything above 15%.
So if they're making a 20% margin, they're giving 5% of
that back to all of the companies that paid in.
So their margins cap. This is where the vertical
integration piece comes in. And So what insurance companies
really want, I'm just putting my insurance executive hat on here.
I need people paying premium in and I really need people to use
the insurance and I need them to use certain things.
I need them to use prescription drugs.
I need them to use the the doctors and the facilities that
we own. Primarily, if you're one of the
big insurance companies, people think of Aetna as an insurance
company. It's actually owned by CVS.
And what else does CVS own? Massive pharmacy chain.
They own an insurance company, Aetna, and they own one of the
largest pharmacy benefit managers that's setting the
price that insurance pays and what the pharmacy they own pays.
What could possibly go wrong? You talk about fox guarding the
hen house. Is there anything wrong?
It's like asking the fox is anything wrong.
And he coughs up a bunch of feathers and says, no, no,
definitely not a problem, right? That's exactly what's happening.
And So what insurance companies want is people to, I don't want
to say they want people to be sick, but we need people to use
the insurance, but not too catastrophically.
They want people to need coverage of some kind.
They do, and at the end of the day, people think that insurance
companies are the ones that are taking all the risk, and they're
not. It's not their money.
The way to think about an insurance company is there a
middle man between the healthcare that's provided and
the people that actually pay for healthcare, which is employers.
About half of Americans are getting insurance through an
employer. So the, the, the, the real power
is an employer's hands to solve this problem.
They're the ones paying for half of healthcare in the United
States. And what most employers don't
realize is that if your claims are high in a given year, you
just experienced this with your own company, you got an
increase, right? The costs are going to be
shifted back to employers no matter what.
So the onus we think, well, I'm locked in for a year with this
insurance company no matter what happens.
I mean, my price is guaranteed, but no, is it really, it may be
guaranteed for a 12 month cycle, but in month 13 you might get a
really big increase. So it's really incumbent upon
all of us as leaders to figure out what's really driving cost
and what can we really do about it.
And so I don't know if that really answers your question,
but I go, I go back to the the the way insurance companies make
money. If you look at their financial
statements, it's through the usage of the healthcare system
and it's particularly things that they have ownership in.
And I think it's one of the biggest problems that the
current administration is going to have to address.
You see little bits and pieces of them trying to address it,
but institutional ownership of the healthcare ecosystem by
publicly traded and private equity backed companies is a
real problem. Yeah, I totally agree.
I I also think, you know, we often on this podcast we talk
about kind of that intersection between regulation and, and lack
of regulation or where, you know, companies can do their own
thing and where government sometimes needs to step in,
whether it's local, state or federal.
And I have been reflecting on this recently that, you know,
it's kind of feels like things have come to a point where
employers are doing a lot. Maybe there are some who need to
do more. And now there's obviously, I
think obviously a need for the government to kind of step in
and say, hold on, like, is this really what can happen here?
Because at some level, I think the government does care about
employers staying in business in order to employ people.
And when costs just year over year rise so significantly on
top of all these other costs that rise significantly, whether
it's groceries or gas or you know, electricity, whatever it
is, right? Those things they all like play
a a very significant role in how employers can actually conduct
their business. And when I think about just the
rising cost of healthcare coupled with how insurance
companies make money, I think this is where sometimes
regulation steps in to say, OK, hold on, sure, you're a business
too, you're publicly traded, you have stakeholders and all of the
shareholders and all that. However, we're also talking
about people who you are kind of requiring to have insurance
because also when you when even though certainly people can get
care and coverage without insurance, you know, there is
obviously a financial burden there.
Some people are starting to make the argument, not many, but some
in a niche, in a niche way that not having insurance is less
expensive sometimes like it kind of depends on what their
circumstances are. And so I could see for sure the
need to have more regulation or at least like government
interference in some of these things.
And I'm curious also because at least in my experience as an HR
leader, through all of the open enrollments that I've kind of
been a part of or conducted, it seems most of the time, the
larger the team, the lower the costs on employers can be in
terms of plan premiums and how effective their funding strategy
can be. But I'm curious if there's
statistical significance there. Like if it's just that, well,
you can have more employees and you can have a greater
percentage of them who are actually requiring more
significant healthcare. And so it kind of comes out in
the wash and doesn't really matter or, you know, cuz also
like this idea of a large employee, large employers, large
businesses being 50 plus, most people would probably think a
large employer is way bigger than that, but it's because
small businesses are under 50. So I'm curious if there is kind
of a correlation between business size and cost of
healthcare in terms of, I should say, cost of insurance premiums
on the employer. And then obviously sometimes
that does translate to the employee too, if the employer
can't cover or refuses to cover in their funding strategy, more
of the the cost of coverage. Yeah, I think those are great
questions. In my experience, what you'll
find is there's small and smaller employers.
And let's just even use this definition of 50 or more
employees inside of an employer. Let's just use a round #100
employees. That company might spend 1.2 to
$1.5 million a year in health insurance premiums.
Is that statistically significant risk dispersion?
And I would say, no, that's not for health insurance reasons.
And I would tell you we used to measure the size of a large
claim. If the claim was over $100,000
fifteen years ago, that was a notable claim and then it was
250, then it was half a million. A few years ago.
We started measuring claims at the $1,000,000 mark and more
because it used to be very rare to see that, but we see it quite
frequently now. And now the catastrophic claim
threshold that we monitor is this $2,000,000 limit.
So somebody gets a really, I mean, we have the, the, the
blessing here is that we have the technology and the
capabilities to treat people with a multitude of illnesses
and, and, and conditions that we used to not be able to treat.
So that's the blessing in disguise here is like, we can
now treat things, but there's a price tag associated with it.
So you might have an employer with 100 employees that's paying
a million to in premium and they end up with a $1.5 million
claimant premature baby that's in a NICU neonatal intensive
care unit for three months. And that could be a million and
a half dollars or $1,000,000 or more.
So just in one person, the insurance company has paid out
more than the group has paid in a premium.
So what do you think is going to happen to that group at renewal?
Right. They're going to probably expect
a sizable increase, but there is a law of diminishing return.
I mean that that holds true. You do need a significant size
of of employees to disperse the risk.
It's similar philosophy to investing in our four O 1K.
We're not taking our four O 1K money and putting it in a single
stock. Why?
Because that would be crazy. It's not, it's not diversified.
So what do we do? We buy a mutual fund that might
invest in two or three hundred other companies and we'll buy
three mutual funds. So in aggregate, we've got a
little bit across 2 or 3000 companies were diversified.
Hopefully we've picked different industries and different size
companies and and whatnot. And so we're what we see
employers doing today is that similar strategy to manage their
insurance. And so we see employers were
grouping them together around the country where you might pull
together 1000 employers in a common pool and there might be
10 or 15,000 employee lives in that risk pool, if you will.
And allows a smaller employer that maybe has 102 hundred 500
employees to now buy insurance at scale because they've been
able to diversify their risk. That's just one component.
If we're all doing our insurance through one of the big four
insurance companies and we allow them to monetize our claims
through their vertical, that's going to result in higher cost.
So the ultimate best outcome where you have the best of both
worlds is you're pooling together employers that have a
similar mindset to say we're going to align our plans in the
right way, where we're buying pharmaceuticals the right way,
we structure the plans the right way.
We create incentives where employees can win and get low
cost, no cost healthcare because we're buying it the right way.
As those types of employers come together, you're able to offer
more diversified risk, you're able to lower the cost of
insurance and you're able to lower the cost of healthcare.
That really is the trifecta that we see the employers that are
winning in today's market, that's the direction that
they're going. They've realized doing it the
way we always have doesn't work. And you mentioned inflation.
We talk about wage inflation, electricity, groceries,
gasoline. What's interesting, if you're to
look at gas, I don't, I don't know what the gas prices are in
New York, but I'm in Texas. $3. Yeah, we're paying about two,
255 to 265 in Texas, depending on which market you're in.
What's funny is back in 2006, 2005, I was paying close to
$4.00 a gallon. I'm actually paying less today.
And if you ask people what's something that's really
inflationary, they'll say gasoline.
Well, it might spike, but it comes down and it goes back up
and it kind of fluctuates, right?
But if you look at healthcare, and in fact, the Department of
Labor has statistics on this, it's the most inflationary thing
in our economy. Insurance particularly, it is a
hockey stick up and to the right above everything else.
But if you look at other industries like consumer goods,
televisions, technology, I don't know how old you are, but do
you? I remember when OK, so VCRS you
don't know what that? Technology is I know of.
Oh, OK. I remember as a kid, we walked
in. Yeah, I remember as a kid, we
walked into a con's electronics store and I was a little kid and
we bought a VCR. We paid $750 for a VCR.
You can't even find that technology now, but before it
was old technology, you could buy them for, I don't know,
$25.00, right? The first flat screen plasma
television was $10,000. I can go buy something that's a
much better technology for a few $100.
And what you see is this. There's consumerism.
People have multiple places to buy them, multiple places to pay
for them. They can read reviews, They have
that entire information set in their hands and they can shop
and they understand how it works.
Healthcare doesn't work that way.
There's very few suppliers, there's very few payers.
If you're buying it through an insurance company and there's a
lot of power in very few hands and there's no information.
Nobody knows what is a baby birth cost?
Is it 5 grand or is it 50 grand or the price of their
medications? Most people don't understand
what that is. So you can actually design that
into your plan to where members at the touch of a fingertip with
a smartphone know if I go here, it's more expensive.
If I go here, I can get it for free.
So there's just a lot that can be done with this.
And I know I just kind of rambled, rambled there, but
there's so much, there's so much here that for an employer to
actually grab a hold of. And the last point I would make
to this, because you kind of alluded to this, the, the role
of an HR leader and the executive team in managing
benefits. You're seeing a lot more of this
come to light now that the employer is a fiduciary of their
employee benefit plan on the on behalf of their members.
And you've seen some lawsuits, the big notable ones are going
to be Wells Fargo and Johnson and Johnson, where the HR team,
the HR leader and the CFO specifically were named in these
lawsuits for breach of fiduciary duty.
And that what that really underscores to me is the role
that we all play, making sure that we have the right advisor
that's helping us understand and properly vet the market.
Because you can, you can tell a broker or an advisor go get us
some options, but are they the right options?
And did you look at all of the options that truly were
available to you to provide the best benefit and to get rid of
this waste? And the thing that people are
looking at, the regulators are really looking at is are there
conflicts of interest in your plan that you should be aware
of? And you've allowed these
companies to essentially RIP you off and RIP off because in one
of the lawsuits, the J&J lawsuit, they specifically cited
a medication that was over $1000 a month that could be purchased
for $38. Unbelievable.
And, and the member was forced to go through that Channel and
pay egregiously for something they didn't have to.
But there's that pricing discrepancy inside of these
insurance plans across the board.
And as you solve that particular problem, that is how you bring
down the cost of insurance and improve the benefit coverage to
the employee and the membership. That's really helpful.
And actually I think it's a perfect segue for one of my last
questions for you, which is what is some if someone's listening
today and they're like, Oh yeah, the open enrollment process in
2025 was brutal. I never want to go through that
again. You know, this episode is coming
out of the pretty much at the top of the year.
So we have effectively like 9 months to figure it out and
figure out how we as HR leaders can do better for not only
ourselves but our employees and our companies.
What is something that they can do today that can improve their
outcomes and frankly, the experience for their employees
and the company? Yeah, wonderful question.
I always the advice I give to leaders is start early.
Most of the time when we when we speak with groups, they're
telling us we don't really address benefits until until
towards the end of the year. And really benefits management
should be a year round cycle. There's there, there should be
at least monthly or quarterly at least touch points where you're
reviewing plan performance and options.
And so when you get to the renewal, there's no surprises.
And if a if a company is looking at alternatives, they should be
talking to multiple advisors. Because if you talk to three
advisors, you might get 3 different opinions about what
your options truly are. And a good advisor is going to
ask a lot of questions. They're going to ask for some
information and they're going to do an assessment of your plan
and provide you a strategic review that says here's what you
have today versus what your stated goals and plans are.
Here's the gaps and how you address those gaps.
And that really should happen before the midway point.
So if somebody's listening to this in January and they, their
plan renews in, you know, January every year, you really
should be talking to advisors in probably April or May,
preferably March, sitting down early in the summer, late
spring, early summer to set those plans of what your renewal
is going to look like for January.
You're making decisions in July based on what the strategic
review showed you in May or June so that you have a long enough
runway to properly address the issues.
Because what we see a lot of companies doing is they'll wait
until, you know, August, September, when the renewal is
about to be issued. And there's just not enough time
to do a proper evaluation in a vetting process.
Because sometimes you're tweaking a plan that an employer
has. Sometimes you're rebuilding it.
Sure, sure, that makes total sense.
I have a lot to think about here, you know, thinking about
the next 12 months or so because based on when we're recording.
Thank you so much, Chris. This has been more than a
riveting conversation for me and certainly I hope for the
listeners also. Where can they learn more about
you and what you do and and maybe even connect and follow
your content? Yeah, I appreciate that.
I'm on LinkedIn, TikTok, excuse me, TikTok and YouTube.
I post long form podcast content where I really break down some
of these contents on YouTube. The central where people can
find me and get access to all of the the the materials, case
studies and content I create is a website
calleditschrishamilton.com. So it's me.
It's Chris hamilton.com. Amazing.
And we will make sure that everything is linked also.
And I really appreciate you helping us to better understand
some of the really a lot of the complexity behind this subject.
So thank you so much and come back, you know, on the podcast,
if if something changes in the in the insurance world,
especially if the government ends up getting involved, I
think that could be very interesting to break down.
So we'll see. But in any case, thank you so
much, Chris. Really appreciate it.
Thanks for having me, appreciate it.
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