Latest / Becker’s Healthcare Podcast / Tackling Healthcare Affordability Through Innovative Funding Models with Morgan Kendrick

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Tackling Healthcare Affordability Through Innovative Funding Models with Morgan Kendrick · Becker’s Healthcare Podcast

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  - GOP ones, Medicare Advantage Headwinds, a Medicaid landscape
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  - that looks different
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  - every quarter.
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  - Their leadership right now means making durable decisions
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  - in an environment that keeps moving, and the
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  - organizations pulling ahead are the ones that stopped
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  - waiting for stability
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  - before acting.
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  - Becker's fifth annual fall payer issues roundtable convenes
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  - more than 500
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  - executive level attendees and 70 plus speakers November
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  - second and third at the Swiss Hotel Chicago.
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  - Two days of senior level dialogue on affordability,
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  - benefit design, value based care, and the strategies
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  - shaping how care gets financed
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  - and delivered,
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  - featuring a celebrity keynote from pro football hall
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  - of famer, Emmett Smith. Agenda and registration at
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  - beckerspayer.com.
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  - Click events in the upper right.
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  - Hi, everyone. This is Elizabeth Caslow with the
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  - Becker's Payer Issues podcast.
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  - I'm excited today to be joined by Morgan
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  - Kendrick,
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  - president and executive vice president commercial health benefits
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  - at Elevance Health. Morgan, thank you so much
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  - for joining us today. Yeah, Liz. Thanks for
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  - having me. Look forward to our conversation.
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  - Yeah. Me too. So before we jump in,
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  - I would just love to hear a little
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  - bit more about your background and your role
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  - at Elevance.
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  - You know, it it's it's
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  - I've been with the company for quite some
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  - time. So thirty one years with the organization.
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  - That that being said, most the entire career
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  - has been spent in the commercial side of
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  - the house, which is a large piece of
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  - our business as you would imagine, all the
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  - employer business as well as the ACA business.
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  - So, I've got the privilege of leading that
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  - team right now of the past several years.
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  - It's a big part of our organization, and
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  - it's a big part of, like, solving problems
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  - in the market, which I'm looking forward to
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  - our dialogue today.
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  - Yeah. So kind of to think about some
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  - higher level context here.
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  - According to KFF, the average family premium has
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  - increased 26%
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  - in five years. So when you're talking to
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  - a smaller employer who's frustrated with that trajectory
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  - and they're feeling the impacts of that, what's
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  - the conversation that you're having with them about
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  - what's driving those costs, and what's realistically within
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  - their control there?
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  - You know, I think, you know, as as
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  - I look at where we're sitting right now
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  - for our 2026
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  - and 2027
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  - cycle in the group employer business,
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  - 100%
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  - of the opportunities that are coming our way
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  - to actually bid on coverage are focused on
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  - affordability and simplicity.
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  - The system is expensive, and it's becoming more
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  - and more so to your point every year.
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  - And the ability to navigate and traverse the
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  - health care system is not necessarily always intuitive
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  - to people. So I think there's opportunities there.
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  - And so when I think about our organization
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  - by the way, we go to mark we
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  - go to market with our Blue Cross and
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  - Blue Shield brand,
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  - called the Anthem Blue Cross and Blue Shield,
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  - under the Elevance Health
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  - parameters.
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  - That said,
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  - people are looking for ways to get cost
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  - down and to simplify how people get care.
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  - And I think that's what's the challenge. It's
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  - a it's a it's a lofty one, but
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  - it's it's the the business is moving to
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  - where we're seeing that what we would call
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  - a traditional
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  - fully insured or fully funded
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  - business
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  - move away from being fully funded. People are
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  - looking for alternative ways to finance the health
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  - care at the employer level, and we're seeing
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  - that amp every year. And so what's what's
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  - happening, there are creative different ways an employer
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  - could lower their spend. Now when we talk
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  - about an employee spend that has gone up
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  - x percent over the past several years, that
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  - is really
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  - dependent on how an employer wants to pick
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  - up. Do they wanna pay a 100%? Do
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  - they wanna pay 50? And then the balance
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  - goes to the employee. That's where that piece
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  - is determined.
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  - We would determine the overarching rate at the
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  - employee level, the employee plus one, the family,
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  - things of that nature that the employer then
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  - would have full reign on how they disseminate
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  - that back to their workforce.
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  - So your talk about solutions kind of segues
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  - nicely into my next question.
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  - Elavance is offering solutions like balanced funding and
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  - multiple employer welfare arrangements to address,
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  - those rising costs. So can you break the
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  - break those down for us and just tell
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  - me how that fits into the broader suite
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  - of solutions that Elevance and other insurers may
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  - offer?
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  - You know, I think those funding rec those
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  - are the ones that we're seeing move move
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  - the needle right now. So people whether it's
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  - you you think about the fully insured where
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  - a premium is given to us. We charge
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  - a premium, we're paid a premium, and then
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  - we cover health care for the employees.
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  - It's it's if we don't if you don't
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  - have any health care claims, you still pay
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  - the premium.
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  - And if you have a lot of claims,
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  - more so than expected, we cover them. So
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  - it's it completely cauterizes the risk for the
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  - employer and the consumer. That's the old way
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  - that health care has been financed. People, because
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  - to your point of expenses
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  - arising, are looking for ways to alternatively fund
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  - that. And you mentioned balanced funded. And then
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  - you've you've talked a little bit about self
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  - funding
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  - and that which typically we saw in the
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  - very, very large workforce. When I think about
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  - the mom and pops and the small groups,
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  - employers, they're really the backbone of The US
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  - economy.
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  - We're a very deep organization in the markets
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  - that we serve. And so we've got scale
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  - and density that's unlike others. But the good
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  - thing about that is it's our honor, privilege
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  - to actually serve these small businesses in our
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  - markets and get creative ways of getting after
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  - it. So talking about balance funded real quick
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  - that you mentioned, this think of part of
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  - it's you're paying a premium
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  - and if your claims manifest better than thought
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  - it originally setting the claims, you have a
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  - bucket of money that you can access. You
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  - will get you will have money coming back
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  - to you.
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  - So that's that's the good guy with it.
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  - And if you go over, your max liability
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  - is actually calculated as well and you're not
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  - charged different. So it's a way of starting
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  - to take a little bit of risk. And
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  - I think that's in that's completely consistent with
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  - self funding,
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  - which typically would be the largest employers. Now
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  - that goes down some place some places it
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  - goes down to 10 lives,
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  - 10 employees.
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  - So people are just looking for that creative
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  - way
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  - of providing a
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  - solid benefit platform for their staff. They look
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  - at it as a human capital strategy. It's
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  - a it's a way to attract and retain
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  - people,
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  - even on the down market side. So the
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  - different funding mechanisms are alive and well. We're
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  - seeing them kinda crescendo moving forward. The MEWA
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  - is another opportunity is when you take a
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  - lot of small employers and put them together
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  - and you get the economies of scale of
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  - a large employer to get different cost down,
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  - whether it's stop loss, whether it's different components
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  - of the actual benefit build, that allows a
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  - small employer to feel the benefits as if
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  - they're a big one, but they're with several
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  - other employers together.
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  - So I'm curious. What are some of the
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  - primary concerns
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  - and points of pushback that you might be
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  - seeing with balanced funding and me was in
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  - your experience?
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  - You know, I see people when they when
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  - they move to them, they see a they
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  - see a relief of their expense structure because
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  - you're paying for it in a different way
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  - rather than just writing a check every month
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  - to the for the insurance company for the
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  - policy. You're part of a broader audience and
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  - that that cost structure goes lower. So people
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  - are pleased with them. We're seeing more and
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  - more people move to them. In fact, I
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  - would say the balanced funded product, which our
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  - competitors offer as well, is one where, you
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  - know, where they have that reimbursement opportunity if
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  - claims
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  - proceed
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  - and manifest better than initially anticipated.
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  - That's been a big draw for a lot
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  - of them, a lot of employers. So that's
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  - where we're seeing it. There are certain markets
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  - across The US that are more mature than
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  - others, but we're seeing it sort of really
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  - grow now
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  - everywhere due to the cost problem that we're
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  - all trying to solve.
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  - I'm also wondering this is just kind of
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  - a follow-up to that. But what are you
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  - seeing with the competitive landscape there with those
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  - two solutions?
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  - Are you seeing other big insurance companies leaning
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  - into those offerings? Or,
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  - where do you think there's room for growth?
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  - Yeah. Can you elaborate on that? We we
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  - are. We're seeing everybody's leaning into them. The
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  - market's very large, as you would imagine. It's
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  - a very big market, smaller employers nonetheless than,
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  - let's say, the national account area.
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  - That said, all of our competitors compete in
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  - that. So how do we structure a network?
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  - What does your network look like? How is
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  - your care management being processed? And how are
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  - we thinking about an advocacy model to where
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  - we're helping guide the consumer
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  - through it? What type of digital act actions
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  - can we put in place to allow people
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  - to traverse the system easier with a more
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  - intuitive process?
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  - So you mentioned earlier that some markets are
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  - a little bit more mature. So some numbers
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  - that I've seen, there are $4,400,000,000,
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  - in savings in Kentucky and 1,300,000,000
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  - in Ohio through MiWay partnerships. So what should
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  - employers and different markets understand about how those
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  - savings are generated, and what does it take
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  - to be a part of, you know, those
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  - types of compelling figures?
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  - You you those those figures are, the actual
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  - savings that have occurred in the geography as
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  - a result of being part of a bigger
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  - NEWA
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  - or a balanced funded cohort of businesses where
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  - they've come together
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  - to to look at this across. That's that's
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  - how the employer saves money. They're paying less
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  - every month for their business.
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  - Rarely are they paying more or infinitely more
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  - than what they were paying on as a
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  - fully insured customer, but they've got the the
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  - opportunities to sort of pay as you go
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  - as your claims come through on a self
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  - funded environment. But balance funded in NEWA, your
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  - rate structure is just based on you you
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  - may be a 15 life employer or a
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  - 20 life employer, but there may be a
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  - 2,000,
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  - 3,000
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  - employers'
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  - lives from various employers in these various solutions
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  - that do bring costs down. The the fixed
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  - expenses. The economics of the claims are gonna
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  - be based on the morbidity of the population.
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  - Is it a sicker population?
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  - Does it meet the the court the industry
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  - sort of norm of where would that should
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  - expect to be? But,
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  - in fact, balance funded is quoted on every
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  - one of our opportunities that come in. It's
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  - automatically part of it with a fully insured
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  - quote or a renewal because we we agree
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  - that we want to help people figure out
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  - a different way to finance
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  - that's more palatable for their business.
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  - So compared to some other solutions that smaller
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  - businesses may look at, I'm thinking mostly of
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  - ICRA's.
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  - Like, what's your advice there, and how do
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  - these all fit together?
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  - You know, we're we're seeing more movement,
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  - to the balanced funded product, quite honestly. If
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  - I had to pick one, that is the
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  - one where we're seeing it. And that's again
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  - where think about you're paying a premium, but
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  - it's a lower premium. And then you've got
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  - a good guy on the back end if
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  - indeed your claims manifest better than we expect.
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  - So, therefore, that's the one that we see.
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  - That in, self funded self funding is typically
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  - in the upper end of the of the
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  - market, sort of, let's say, a 100 lives,
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  - a 100 employees and up. And then you
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  - think the ICRA's, ICRA's are there. They're moving
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  - forward. But, again, a lot of people wanna
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  - hold hold on to their human capital strategy
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  - and how what type of benefits they have.
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  - When you go to an ICRA, you basically
• 10:31
  - don't have that. Everybody buys individual coverage. Now
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  - that might be appealing
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  - to a lot of employers because all the
• 10:36
  - paperwork and everything through admission administration
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  - goes away. And then people have a policy
• 10:41
  - that they can carry with them if they
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  - retire, if they move, change employers, things of
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  - that nature. So there's good, and I wouldn't
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  - say there's bad to any either one of
• 10:50
  - the options or any of the options have
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  - a bad outcome.
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  - All of them are around how do we
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  - get the the savings down for the employer
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  - and how do we make it simpler for
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  - people to actually use the benefits the employer
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  - is funding.
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  - So, Morgan, as for wrapping up, is there
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  - anything else that you wanna share with us
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  - today?
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  - You know, the business is alive and, the
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  - market is are is expecting us to show
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  - up with solutions that lower cost. We talk
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  - about alternative health plans. They could be various
• 11:15
  - network strategies.
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  - I also believe that, you know, bringing cost
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  - down takes a a relationship between the employer,
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  - the provider,
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  - and the insurance company. So as we're building
• 11:26
  - product, you'll see more and more where they're
• 11:28
  - connected to specific systems
• 11:30
  - and particular products that the products that have
• 11:33
  - more of a primary care focus to them.
• 11:36
  - So we all know remember the years of
• 11:38
  - the HMOs back in the eighties and nineties,
• 11:40
  - or many of us do, let's say. That
• 11:42
  - said, it's an opportunity to sort of think
• 11:44
  - in that realm in a modern in a
• 11:46
  - in a modern mindset. How How do we
• 11:48
  - get primary care more involved where you are
• 11:51
  - being referred to your advanced specialty rather than
• 11:53
  - just picking them and go? There are a
• 11:55
  - lot of things that an employer and a
• 11:57
  - consumer can do to drop cost. It's not
• 11:59
  - that it helps to bend the trend when
• 12:01
  - you have benefit designs that actually are congruent
• 12:04
  - with those actions of bending trend.
• 12:06
  - Well, Morgan, thank you so much for joining
• 12:08
  - us today. My pleasure. Thank you for having
• 12:11
  - me. Yes. Of course.
• 12:12
  - And to our listeners, if you'd like to
• 12:14
  - hear more podcasts from Becker's Healthcare, you can
• 12:16
  - visit beckershospitalreview.com.
• 12:18
  - Thank you.