Recent moves by some of the country’s most iconic corporations have the potential to seriously shake up the healthcare market’s status quo. Hoping for more insight into the whys and wherefores behind these initiatives, Employee Benefit Adviser buttonholed leading healthcare and insurance authority Lindsay Resnick, following his keynote address at last month’s Workplace Benefit Renaissance conference in Atlantic City, N.J. Resnick, who is executive vice president at Wunderman Health, had a number of thoughts about why Apple, Amazon, Berkshire Hathaway and JPMorgan Chase plan to self-insure and manage their own health plans. Here are some highlights from that conversation.
Employee Benefit Adviser: Some big companies are looking into new ways to provide healthcare to their employees. Apple, for instance, just said it was going set up a network of health clinics for its workers and their families at its Cupertino, Calif., headquarters. What’s your impression of Apple’s move?
Lindsay Resnick: We’re seeing a lot of movement by corporations to put clinics on their campuses. Sometimes they’re run by Walgreen’s. Sometimes by private companies.
Is it going to be a trend? We don’t know. But Apple is going to do it and do it right. They’ll do it with some of their partners like Stanford Medicine (the two are working on a heart study based on data from an Apple Watch app).
I wouldn’t be surprised to see them take the concept, prove it with their own employees, and then move it out into the healthcare market at large.
EBA: Do you equate Apple’s initiative with the joint moves by Amazon, Berkshire and JPMorgan?
Resnick: Yes. Think about it. Amazon looked at how it can play in the fresh food marketplace and then, boom! They buy Whole Foods. These are very strategic, purpose-driven companies.
EBA: What’s behind these moves?
Resnick: You’ve seen in the group market the shift in the mix of self-funded versus insurers bearing the risk. Self-funding is now 60% versus 40% for the risk business. That’s one driver – now it’s the employers’ money at stake.
The second driver is that employers are just fed up. They’ve lost confidence that there’s going to be a solution coming out of Washington that is really going to change healthcare. It’s such a big budget item; it’s going to be 20% of the economy by 2025. Employers feel they have to take some control of this. Large employers have 100,000 to 250,000 employees. Think of the impact if they could knock 5% or 10% off their health cost.
EBA: Seems like there’s a lot of disruption going on. Where is all this headed?
Resnick: I think you’re going to see companies that are good at their business look at healthcare and say, ‘You know, if it’s going to be a $5.5 trillion industry, what’s our piece?’ Whether it’s the CVSs, the Walgreens, or even Lyft—which is looking to get into healthcare and medical transport—we’ll continue to see companies that think they have a better business model attack pieces of the healthcare puzzle.
EBA: When we talk about the Apples or the Amazons of the world, we’re referring to very large and extremely innovative companies. But what about smaller businesses? We’re seeing talk again of association health plans. Do you think there’s as much potential for smaller employers to take greater control of their health spending?
Resnick: I do. The only concern here is the investment that it takes. It isn’t as easy for a small organization to make that investment.
When it comes to association plans, employers have to make sure they don’t fall into the same traps that we saw in the past. The benefits weren’t great—the plans had sort of a shaky structure—and we saw how they tumbled. If association plans are going to be successful, it’s really important that they focus on managing the business of healthcare.
EBA: With all these healthcare-related moves by employers, what does it mean for benefit advisers?
Resnick: That’s a good question. We’ve talked about digital health; we’ve talked about big employers; we’ve talked about little employers—with everything going on, the employee—the consumer in all this—is confused. I would say those benefit advisers who are going to rise to the top are the ones that are real advocates for their clients. Helping their clients—whether they are businesses or individuals—navigate through this mess of financial and clinical transformation.
The only other thing I’d add is that there is the threat of direct to consumer hanging over the brokers. When you’re on Amazon, there’s a button for sporting goods, right? So how long is it going to be until I can go on Amazon and buy a short-term medical plan?
So the brokers always have to be proving their value and helping their business clients navigate this really complex maze.
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