Eric Calciano of New City Insurance on Employee Healthplans

Mike Interviews Eric Calciano of New City Insurance about the rising cost of employee healthcare. The discussion includes reasons for higher rates, the more effective use of wellness programs, and cost saving tips for employees and their families.

Episode Transcript

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The following broadcast is paid for byWhat's at Risk. This is What's
at Risk with Mike Christian on WBZ, Boston's news radio. Hi, I'm
Mike Christian and this is What's atRisk. It's a fragile, divisive,

(02:00):
and often chaotic time in our world. Yet, as Sunzoo, the author
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informed guests to explore the opportunities inrisk and provide thoughtful perspectives on an array

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of topics. Well, here's astat that'll get your attention. The United
States medical system is estimated to wasteseven hundred and sixty billion dollars annually.
After years of ever inflating medical costs, American companies and union benefit plans have
alleged in a series of lawsuits thatthe country's biggest health insurers are squandering their

(02:46):
money. Kraft Hinds, which employsthirty seven thousand people, alleged ETNA paid
millions of dollars of claims that nevershould have been paid and has prevented the
company from being able to figure outwhy. In another lawsuit filed in twenty
twenty one in the Eastern District ofVirginia, trustees for a bankrupt trucking company

(03:07):
accused United Healthcare and Harvard Pilgrim Healthof making about twenty seven million in overpayments
from the company's funds, and saidthe insurers blocked attempts to audit the panents.

(03:32):
Hello everyone, We're here with EricCalciano, Benefits and healthcare expert from
New City Insurance. Eric Health insuranceis one of the most valued benefits from
an employee standpoint, and at overa trillion dollars cost annually, typically the
most expensive benefit for employers. Averagecost per family is twenty two thousand ments,

(03:54):
up twenty percent over the last fiveyears, and it's projected there's going
to be another seven percent increase intwenty twenty four. What are your thoughts
about that? What's driving all thoseincreases? There's quite a few things.
One of the pieces is that weare seeing a ripple effect from the pandemic.
Whereas some industries could feel that muchfaster, the feel the inflation that

(04:17):
came through much faster on that.When it comes to health insurance and healthcare,
those contracts between the major hospital systemsand the health insurers last anywhere from
two to three years, so there'sa time lag for when the hospitals are
feeling this upward pressure and pricing.They're dealing with new supply chain issues,

(04:41):
they're dealing with staffing issues, demandfor higher pay from their employees. That
all doesn't get seen on the insuranceside until those contracts are up for renewal,
and then the hospitals are demanding higherprices. That then gets passed along
to the members on the plans andthe business is that that run those plans

(05:02):
in terms of higher premiums And howdid COVID impact that just because of all
of the inflation that we saw inthe wake of the pandemic. So just
like while we've seen egg prices goup and all sorts of consumer goods drastically
increasing cost same thing with healthcare.It's just that that was it's just a

(05:24):
little bit slower for it to happenbecause of those contracts, right, and
employers have shifted more costs onto workersby requiring higher deductibles, higher monthly contributions
a variety of different ways that actuallyleave people paying more for medical bills.
Is there another way around that asshort of the employers having to pay more
money? But how else can employeesthink about it? Because I know with

(05:47):
our listeners that's this is a majorcost for them and it's and it's something
that they absolutely have to have anythoughts or suggestions about that. Yeah,
there's there's really two components to that. One is what can what can the
employees do? What can you doon an individual level? And then the
other question is what can businesses do? Because businesses account for fifty four percent

(06:12):
of the health plans of the coverageof Americans, and that's followed by Medicare
and Medicaid, which are about eighteenpercent each. So by far, employer
sponsored health plans are the greatest typeof coverage in the country in terms of
the percentage, And so when thestrategies that employers bring to the table is

(06:34):
going to be the most important wayto help drive down costs. But for
the individuals that are on those plans, there's less things that they can do
because they're not the ones that arepulling the strings when it comes to the
plan strategies. But within their plans, they can they can always make sure
that they are educated on what typesof plans that they're on. So basically

(06:55):
being a good healthcare consumer, makingsure they understand what they signed up for,
what they're deductible, applies to,what services, it applies to,
what it doesn't, Does it applyto all services, does it just apply
to hospitals and major medical those typesof things are important. And then understanding
what your likely healthcare needs are overthe next year and then making a good
decision about that. And typically whenwhether you're on an individual health plan,

(07:17):
whether you're on Medicare, Medicaid,or through an employer sponsored health plan,
there is typically always an advisor thatcan help individuals look into that, understand
what their plans are offering, andmake sure that they're signing up for the
plans that are going to work bestfor them. Yeah, it all seems
so complicated to me, and I'vebeen in the insurance business and it seems
complicated to me. How you know, you just mentioned the advisor. But

(07:39):
just for our listeners, there arethere tips that they can think about,
specific things that can save a littlebit of money on these plants that are
so complicated. Yeah, yeah,I think when it comes when it comes
to the types of plans that you'regoing to sign up for, the major
split the major two types of plansor HMOs and PPOs. So understanding,
well, amos are typically less expensive, so that might be the route that

(08:01):
you'd want to go, But ifyou go to an HMO, it does
require referrals to go see specialists,So you have a you have a point
of service where you're going to yourprimary care physician and then they will recommend
you or refer you out to anyspecialists that are required. So there's there's
an extra step in the process asyou're obtaining healthcare, but the cost is

(08:22):
significantly cheaper. So that can bea good option for people that maybe have
lower healthcare requirements and are not asconcerned about seeing any doctor within a network
and are okay with those referrals tokeep costs lower for them. But for
those individuals that want to have allthe all the physicians and hospitals available to
them within that network, then thePPO is going to be the greater option.

(08:43):
It's just that it's going to requirean additional premium to accomplish that work.
The other thing too, is justto be an advocate for yourself when
it comes so many many claims,for example, are are being auto adjudicated
by these health insurers. So you'vegot about what the Bucca carriers, so

(09:09):
Buccas, the Blues, the UnitedSigna and ETNA, and whenever they process
claims about ninety five percent or justthere no human ever looks at it,
so it just gets processed by acomputer. When we see that happen.
Errors happen regularly in the sense thatthe hospitals send in a claim for larger

(09:30):
than what they should actually be owedand because the system doesn't have a human
checking it, then it just getspaid. So it's important to always be
looking at what were my claims actuallyfor, what did my provider provide to
my health insurer, and if therewere any issues with the claims, to
advocate for yourself if the claims denied, because they are that can happen often

(09:52):
as well, to advocate to appealto go through the process. And again,
if you if you're on an employersponsored health plan, there's typically an
guys are associated with that plan thatcan help you through that process. If
you're on an individual health plan,then you certainly you can also go through
those processes on your own, butthey can be time consuming, but it
can be worth it if you're dealingwith significant medical bills. So the other

(10:13):
component to look at is for individualsthat are not offered employers sponsored health plans,
or even if you are offering anemployer sponsored health plan but the plan
is not affordable for you, thereare low and no cost options for healthcare
that are run either through the state, on the state run health plan called

(10:33):
Medicaid, or through the Affordable CareAct exchange. So there's depending on where
your income's at. If you're onMedicaid, then the premiums are covered one
hundred percent. You don't have youdon't have a premium, a monthly premium
for your benefits you and then withthe Affordable Care Act plans and you can

(10:56):
go to healthcare dot gov to lookat your option there see if you qualify
based on your age and income.If you do, then the subsidies can
be quite strong. The government willpay for a significant portion of those benefits.
It's on a sliding scale based onincome, but the lower income you

(11:16):
can get plans for as little asa dollar, so that can be a
really good option, just depending onwhere you're at, and it never hurts
to look to and check on healthcaredot of and see if you make qualify
based on those factors. Tell usabout these recent allegations that insurance carriers are
overpaying health claims on behalf of theiremployer clients. Don't they have a fiduciary

(11:39):
responsibility to their clients? You wouldthink that they do have a fiduciary responsibility.
I personally think that they should havea fiduciary responsibility to their clients.
The health insurers are arguing that theydon't have a fiduciary responsibility for their clients,
and when that's been tested in court, sometimes it's been stated that they

(12:00):
do, and then it's been appealedand then stated that they don't. So
it's more it's more or less stillengaged in legal battles to determine are they
truly a fiduciary or not. Now, the sponsor for the health plan,
so basically the company that runs thehealth plant the employer is a fiduciary,
but the insurance company itself wants toargue that they're not a fiduciary. And

(12:24):
when they can argue that and ifthey can legally get that to be approved
it's the case, then they don'thave to do their best to handle the
funds of the plan in the bestway possible. Are there are new transparency
rules though, right that maybe giveus the employer a little bit more leverage

(12:45):
in this There are they've been rollingout. So the hospital price Transparency rule
kicked in a couple of years ago, where hospitals were required to publish their
pricing on three hundred common procedures.But what we found with that, for
example, is that there's very littleteeth in that law. So while the

(13:07):
law states that they need to publishthose prices, most hospitals aren't complying and
they're just not posting the data becausethe finance itself for non compliance is one
hundred thousand dollars. Now, theseare these hospitals are dealing in the in
the many millions on their balance sheets, so looking at one hundred thousand dollars,

(13:31):
it just doesn't even affect them atall. So while I think those
transparency rules are good and they're movingin the right direction, we're going to
need to see some higher level ofenforcement for them to make a big difference.
So if the hospitals and the insurersare overcharging the employers, who in
turn are sharing costs and pushing costssharing down to their employees who are the

(13:54):
ultimate consumer. How does how's thatplay out over time? Do they do?
We get class action lawsuits? Whathappens? Yeah? Well, we're
we certainly are seeing lawsuits come comeinto play at this point where some major
employers and unions are now suing themajor insurance companies. So for example,

(14:16):
craft Hines is filing a suit againstEtna. United Healthcare also has some suits
against them as well. So weare seeing that happening where these companies are
saying, well if we are,because because as we talked about with the
fiduciary rules, even if the insureris not a fiduciary, the employer or

(14:41):
the union is a fiduciary, andso they can't do their job to make
sure that they're that they are treatingand handling the money the right way if
that information is not being made transparentby their insurer so that the understand where
claims are going. And that's thebiggest claim that's happening right now, is
there saying claims are being mishandled.And we also the ENSURE is not providing

(15:05):
us information for us to be ableto verify how how those claims are being
handled, and we need that information. We need more transparency. You know,
you hear a lot of politicians andyou hear consumers, and now it
sounds like you're hearing corporations say ourhealthcare system is broken. What do you
what do you think about that?And what if it is broken, what's
what are some of the solutions?Yeah, I think there's a lot of

(15:26):
truth to that, and I thinkthat when it comes to health insurance,
it is such a mammoth industry thatwe have, and it's it's hard to
know exactly what's going to be thebest solution across the country. But when
I look at as I talked aboutearlier, that over half of the individuals

(15:46):
covered in this country are on employersponsored health plans, then that's a place
where we can really target for improvinghealth plans by removing waste from health plans.
And we see a lot of wastefrom those Bucca carriers, the Blues,
United, signa, Etna, andemployers have more ability to customize their

(16:08):
health plans than say on the individualmarket or with Medicaid, where there's no
there's no real pull from an individualconsumer. But on an employer sponsored plan,
because they've got a pool of employees, they are able to customize their
health plans, work with administrators thatare going to manage claims better. They

(16:29):
can work with pharmacy benefit managers thatare that are not greatly inflating the costs
of drugs. Those types of solutionsand are what I think is going to
have a great effect on reducing healthcarecosts in this country because the employers are
understanding that they need to keep thisaffordable for their business, and so there

(16:51):
they are the ones that are lookingmost at ways to be most efficient with
our dollars that are being spent.Now, you you mentioned the size of
the health care industry. I've heardI've heard stats that it represents twenty to
twenty two percent of the GDP inthe country. That's a that's a huge
industry, hard to change, hardto change, and a lot of people

(17:11):
rely on that. Do you thinkthat we oftentimes with insurance and maybe as
consumers as as policyholders, focus onyou know, really there's too much of
a focus on surgery, on pharmasolutions on you know, just having different
procedures as opposed to more holistic healthwhich might come in under employer health and

(17:33):
wellness type plans. What are yourthoughts about that. I always love the
idea of encouraging health. I thinkthat the saying of an ounce of prevention
is worth a pound of cure isvery true when it comes to when it
comes to our personal health. Weknow that individuals who eat well and are
and treat their bodies well and makesure that they are going to receiving their

(18:00):
their annual physicals fair out better inthe long run, and that reduces the
cost burden on everybody when that happens. What my hesitation around that is always
that one of the hardest things todo is to change human behavior. So,

(18:22):
you know, how do how dowe really encourage individuals to change their
behavior? And wellness plans well thatare wellness plans that are through employer sponsored
plans, those can certainly help.They need to be administered the right way
though, because otherwise it's it's hardto get engagement from the employees. So
it needs it needs to be donewith the right strategies. But we are
even seeing even on even just fromthe insurers. They are putting out more

(18:47):
and more wellness types of solutions thatare just built into their plans. So
now in the more recent years,a lot of times they'll have added benefits
that are just included by being inold for gym discounts, and they'll they'll
have built in mental health services fortele mental health. Uh. There,

(19:10):
we're seeing a lot more telehealth sothat people have easier access to a doctor,
low cost, and just quick accessto be able to obtain care quickly
before an issue becomes a larger issue. So those I think are good trends
and would certainly like to see thatcontinue. But when it comes to relying
on wellness plans to make a drasticdifference, the key there is how do

(19:33):
you get people behind that? Howdo you actually get people to change their
behavior, which can be tough.Yeah, I mean we're you know,
I think stats would say we're notthe most healthy nation in the world.
And I think and we also knowthat so many illnesses and sicknesses and death
you know, comes from lifestyle situationsas opposed to catching a virus or disease
or something, And so I thinkit's it would seem that it would behoove

(19:57):
all employers and whole system to reallyfocus on employee health a little bit more.
But then then the bat it's counterbalancedby the fact that it's twenty percent
of the GDP, right, Soit's a big business. Yeah, it's
a quandary. Yeah, And themore the more, the more engagement we
can get with those types of thingsis certainly great. Is so we do
see, we do see within plansa lot of a lot of plans will

(20:21):
have smoking cessation programs, They'll havediabetic and pre diabetic programs to help those
individuals maintain a healthy lifestyle, keepkeep the uh the diabetes from causing any
greater health problems. So those typesof things when accessed early, and things
like smoking cessation to stop habits thathave clear health consequences, those those definitely

(20:45):
are are really great to see whenwhen people engage in those on a personal
level. But then also yeah,on the population level as well, because
that reduces risks for everybody, itreduces it increases the overall health of the
country, which should in theory,reduce healthcare costs. One last question,
Eric, you're obviously an expert inall of this, and I appreciate your

(21:06):
views and your perspectives on it.In your opinion, what is the future
of healthcare in the United States.I think in the short to mid term,
we are going to continue to seecosts rise. Unfortunately, that's the
trend that we're seeing over the courseof this next year. I believe as

(21:26):
these as we see inflation everywhere,it's going to continue to hit healthcare.
Healthcare consistently out cases inflation, andI think we'll continue to see that.
I do think there's going to bethere's going to be a point at which
you get more and we're seeing thisnow where more and more businesses again,

(21:47):
those those that hold the ability toreally customize their health plans more so than
in an individual when you go tothe individual market, for example, with
Medicaid, you get x amount ofoptions and that's all you get. But
with with employer sponsored health health plans, those that are really in control and
pulling the levers on those plans andpicking the components that build up those plans,

(22:10):
they have a lot of ability tomanage a plan in a way that
removes the waste from the plans.And there's been this status quo where for
years and years, these the majorhealth insurance carriers have had such a foothold
that everyone just follows along with that. But now we're seeing this pushback,

(22:32):
right, We're seeing we're starting tosee that with the with the lawsuits they're
being filed, like the one withwith Hines versus Etna. When when we
see that start to happen and thatkind of pushback, we're going to start
seeing those businesses say, we knowthere's other solutions out there. We know
that we know that it's not onlyEtna that can administer a health plan,
and we can work with other carriersthat are going to operate with a level

(22:56):
of transparency that that will help usmake sure that our employees are getting the
best healthcare that they can for thebest dollar that they can. So that's
that's where I from an optimistic viewpoint, I hope that this continues in the
sense that there's there's a pushback againstthe insurance so that we can we can

(23:17):
make sure that healthcare is is operatedin a way that works best for the
consumer. Well, thank you Ericfor all of your insightful comments. I'm
sure it's been very helpful for ourlisteners, So thank you very much.
I appreciate it. You're welcome,Mike. Thank you for having me solved

(23:37):
to see first fucus feeling that's real. According to a new study, few

(24:02):
Americans have a lifestyle that is consideredhealthy. In fact, less than three
percent of Americans meet the measurable characteristicsthat reduce a person's risk for heart disease.
According to a new research study bythe Mayo Clinic, the latest data
from a decades long health survey findsthat, yet again, the vast majority

(24:23):
of Americans have a poor diet andmany of us are inactive. Specifically,
just ten percent of Americans eat enoughvegetables and only twelve percent eat enough fruit,
according to recent responses to the CDC'ssurvey. Recent responses also reveal that
twenty five percent of Americans don't doany exercise outside of work activity.