Senate Version of ACHA a Step in the Wrong Direction

If you’ve ever wondered why Americans hold the President and Congress in low regard, the health care reform legislation currently careening through the halls of Congress provides an answer. On Thursday Senate Republicans revealed their version of Affordable Care Act repeal-and-replace legislation. After working weeks in secrecy, this is what they came up with? It would be embarrassing if it wasn’t so sad.

The Senate Republican health care reform bill, officially entitled the Better Care Reconciliation Act or “BCRA,” is long and I haven’t read it all yet. But it’s clear from those who have that it:

  1. makes changes to the Obamacare health insurance exchanges.
  2. reshapes Medicaid.
  3. substantially reduces taxes, especially for the wealthy.

And it does all this in a manner that, depending on your ideology and level of cynicism, can be described as incompetent, mean, inept, savvy, inadequate, or malpractice. It makes one wonder why Senate Majority Leader Mitch McConnell insisted the bill be drafted in secret. At least if provisions had been debated in public we would have had a chance to get used to some of this foolishness. Seeing it all at once as a cornucopia of bad policy, however, only makes its flaws more prominent.

Why am I so disappointed with the BCRA? ? Why do I believe it will result in Congress (and, due to his support of the legislation, President Donald Trump) to fall further in the public’s regard. First, because meaningful, substantive health care reform is sorely needed. We need to address the ACA’s many shortcomings. We need to address the cost of medical care. We need to create a stable insurance market. There’s a lot that could — and should — be done.

Instead we get proposals that common sense makes clear are dangerous and unworkable. Consider:Republicans repeatedly claim their goal is to lower health insurance premiums. Yet a key provision of the BCRA does away with requiring consumers to buy health insurance coverage (an “individual mandate”), but still insists carriers issue coverage to all applicants regardless of their health conditions (what’s called “guarantee issue”). This out-of-balance approach guarantees the individual market will enter a death spiral in which coverage becomes increasingly affordable and, soon, unavailable.

Back in November, when I first wrote about what health care reform might look like under President Trump, I imagined what would happen if Republicans eliminate the individual mandate but kept guarantee issue of coverage. “Under this situation, few consumers — especially young, healthy consumers — will likely obtain coverage until they get sick or injured. This adverse selection would be cataclysmic and few, if any carriers, would want to participate in such a market. After all, insurers are in the business of spreading risk across a broad population. Guarantee issue without an obligation to buy coverage guarantees a concentration of risk across a narrow population.”

The title of that post was “Republican Health Care Reform: Destruction or Refinement?” Looks like Destruction is in the lead.

Or take the political gamesmanship at play. Many Republicans are expressing concerns regarding the bill in its current form. Some of these appear orchestrated. Senator McConnell will allow them to make certain amendments to the BCRA and add a few billions dollars more in spending to address a worthy cause. These current critics will then find the bill improved sufficiently to earn their vote — and make them look like tough negotiators. There’s nothing inherently wrong with this Kabuki dance, but it does make one skeptical of the process.

Then there’s the reality that much of the Republican health care reform plan (whether the Senate’s BCRA or the House’s American Health Care Act) has nothing to do with the effort to “repeal and replace” Obamacare. Yes, the ACA expanded Medicaid eligibility and whether to reverse that expansion is certainly germane. However, the BCRA and the AHCA go further. They not only refashion how states are reimbursed for Medicaid spending, they reduce the programs growth by hundreds of billions of dollars.That their “health care reform” legislation happens to cut taxes for the richest Americans by a nearly equal number of hundreds of billions of dollars only makes this approach more unseemly.

So is it a coincidence that the Senate health care reform bill delays substantial cuts to Medicaid until 2021? That’s the year, barring a change to the Constitution, in which there can legally be no President Trump — at least not the current President Trump. Or is this a way to reassure some moderate Republicans that a future Administration might support reforming the BCRA to do less harm to their constituents?.

Democrats are also contributing to the mess that is health care reform 2017-style, too. They delight in attacking Republican repeal and replace measures, invariably acknowledging that the ACA needs retooling. Yet Democrats fail to offer any hint of the reforms they believe necessary. This is as bad as President Trump proclaiming that Obamacare is dead while taking steps to kill it by threatening to withhold funds and generally creating uncertainty. When government leaders are consistently trying to have everything both ways it’s hard to respect them or the process.

June 22nd was a bad day for health care reform and American politics. Senate Republicans introduced a bill that does more harm than good, Democrats remain silent on alternatives, and the President adds chaos to the mix.

Still wondering why the public holds its leaders in such low regard?

This post was also published on LinkedIn. Please subscribe to my Flipboard magazine for curated articles on the issue: Alan Katz Health Care Reform Magazine on Flipboard.

 

Clients Pull, Zenefits Pushes Benefit Brokers to Adopt Tech

“The question is not if benefit agencies will go digital. The question is when. The answer … 2016.”

That’s how I began my technology talk at the California Association of Health Underwriters’ TechSummit on September 29th in Universal City. Several in attendance  asked for the presentation. Since the slides are mostly key words and graphs, I thought sharing the content here over a couple of posts would be more helpful.

I’ve been engaged in sales technology since the 1980’s (yes, Millennials, we had technology back then). However, the need for successful producers to embrace technology has never been greater. This first post explains why. Tomorrow I’ll offer a checklist brokers can use when selecting technology.

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Consumers Pull, Competitors Push

Going digital is inevitable. Customers want it. Competitors make it necessary.

Customers are increasingly running their businesses with technology. They use digital tools to keep their teams informed and aligned, preserve and transfer documents, reach customers and track sales. Even traditionally low-tech companies—plumbers, barbers, dry cleaners—use technology to schedule appointments, process payments, track invoices and speed work flows.

Or consider this: in 2013, nearly half of Staples sales were over the Internet. This makes Staples the nation’s third largest online retailer behind Amazon and Apple and ahead of Walmart. The same survey found Office Depot was the ninth largest online retailer. That’s a lot of businesses, both large and small, using technology to buy something as prosaic as office supplies.

Digital activity by clients is creating a gravitational force pulling more-and-more benefit brokers into the tech orbit. After all, if your clients are using technology and conducting business online, shouldn’t you?

If customers are pulling brokers to go digital, competitors are pushing them in the same direction. In poker, if you look around the table and don’t see the sucker, you’re the sucker. Similarly, if you’re not using technology to grow your business, someone else is using technology to take your business.

Zenefits and Others Push Brokers Toward Tech

Exhibit A: Zenefits—the Donald Trump of benefit brokers. Like Mr. Trump, Zenefits can behave like a rich, arrogant bully. Yet, either because of or in spite of this character flaw, Mr. Trump and Zenefits have shaken up their worlds and highlighted weaknesses in established players.

Like Mr. Trump, Zenefits’ strategy seems to embrace trash talking competitors. Zenefits CEO Parker Conrad has promised that “If you’re an insurance broker, we’re going to drink your milkshake.” (At minute 1:30 of the linked-to video). He claims competing brokers “barely know how to use email.” (At minute 38 of the video). Mr. Conrad’s prognostication concerning today’s professional benefit brokers? “All of the existing brokers today are all f**ked.”  OK, even Mr. Trump doesn’t drop the f-bomb on his opponents in public, but that’s most likely just a generational difference in styles.

Some brokers complain that Zenefits is using its riches (the company has raised over $500 million dollars in capital) to post arguably misleading comparisons between itself and specific independent brokers—a tactic Mr. Trump might applaud. As I’ve written before, even though I find the comparisons unfair, this isn’t a new marketing tactic nor outside the norm in America.

Yet, for all his bombast and bullying, Mr. Trump has forced other Republican presidential candidates to step up their game (a task at which many are failing). They may not like him, but his opponents need to adapt to his presence. Zenefits and similar companies like Namely and Gusto are forcing brokers to adapt to new realities. In this new world, simply delivering value is no longer enough. Clients now need to perceive that value.

It’s Perceived Value that Matters

Benefit brokers have long provided considerable value to their clients. They shop the market and find the right solution for clients’ unique needs. They answer questions and resolve problems. They provide informed, personalized, professional counseling and advocacy on behalf of their clients before and after the sale. Simply put: they earn their commissions.

Yet, for too long, too many brokers have been hesitant to highlight their value. In fact, they often undermine how clients perceive their worth by claiming their services are free. This is both inaccurate (health insurance premiums include brokers’ commissions) and diminishing (consumers tend to undervalue what they don’t pay for).

Zenefits takes advantage of brokers’ modesty. They offer businesses free HR and benefit administration software in exchange for being named the employers’ broker-of-record. That’s an attractive deal when the software has perceived value and the services of the incumbent broker is hidden.

Technology can help put brokers’ value on display by providing greater insight into what brokers deliver. Increased transparency can lead to greater perceived value.

Significantly, Zenefits’ leadership knows this. When asked about the company’s competitors, Sam Blond, head of sales at Zenefits, claimed they had none. He grudgingly acknowledged that professional brokers could fill that role, but “what you get with a traditional health insurance broker is no technology.(At about 28:30 in the video).

Zenefits and new firms like them have seized on this digital gap to tilt the playing field in their favor. When your competitor points a neon arrow at your problem, it’s smart to pay attention. Many brokers are and that’s what’s pushing them toward increased use of technology.

Successful Brokers Leverage Tech

Competition from well-funded technology firms has never been greater, but there’s nothing new about the role technology plays in helping brokers get ahead. My book, Trailblazed: Proven Paths to Sales Success, grew out of a study of 200 health insurance brokers in six states. The study sought to identify what practices, processes and perspectives fast-growing sales professionals shared that their less successful colleagues did not.

Among our findings was that high-growth producers were significantly more likely to incorporate technology into their business than the others. They were more likely to use technology across a broader range of functions, too. Brokers whose business was declining were the least likely to have incorporated technology into their practice.

When I led individual and small group sales at WellPoint (now Anthem) I championed the 1999 launch of AgentConnect, which enabled our agents to sell individual coverage online through their own websites. While competitors (think PacifiCare) were trying to displace brokers using the Internet, we used it to empower brokers. The result: WellPoint increased our market share while hundreds (and eventually thousands) of independent agents launched online sales initiatives. Many of them ranked among WellPoint’s top producers.

WellPoint’s AgentConnect launched 16 years ago, but was not the first sales technology adopted by successful benefit brokers. I was helping program the quoting system for Multiple Services (the small group general agency my father, Sam Katz, founded in Los Angeles) in 1983. And there were digital sales tools available before then.

Not If, When

Technology has been a part of the employee benefit world for a very long time. The increased pull of clients and push of competitors just makes the need to leverage tech tools more pressing ever before. As noted at the start of this post, the question is when will brokers will go digital. I believe the answer is early next year.

Many brokers have already adopted innovative technologies. The majority, however, have not and now face a dilemma. Do they deploy new digital tools—or ask their clients to deploy new technology—in the middle of open enrollments, ACA calculations and the host of other time-consuming, business-threatening challenges all happening between now and the end of the year? Or, do they wait until 2016 to leverage the tools available to them?

I have a stake in the answer (as disclosed, below), but even if I didn’t, I’d bet most brokers will fight their way through the rest of 2015 with the tools they have before transforming their agencies with new technologies.

Being thoughtful about the technology you embrace is important, because the decision is critical. Not only are you entrusting your livelihood to the technology, you’re entrusting your reputation and your clients’ well-being to the platform you choose. Adopting technology costs more than money, there’s a host of hidden expenses as well. I’ll discuss these and other factors, as well as offer a checklist to help you evaluate your technology options, in tomorrow’s post.

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Full Disclosure: I’m a co-founder and CEO of Take 44, Inc., a technology company which, in early 2016, will launch NextAgency. The NextAgency platform will integrate quoting, CRM and enrollment tools to help brokers sell more with powerful HR and benefit administration tools they can give to clients for free. This is in pursuit of our mission: to help benefit brokers level the playing field against high-tech disruptors like Zenefits while spotlighting their high-touch value.

 

Health Care Reform the 2016 Where’s Waldo

At this time in 2011, six months before the Iowa caucuses, health care reform was a big deal. Republicans couldn’t see a live microphone without calling for its repeal. And one would think that the official name of what was commonly referred to as “Obamacare” was “the President’s signature issue” in his first term. Flash forward four years and health care reform is now the “Where’s Waldo” issue of 2016: it’s there somewhere, but darn well hidden.

True, every candidate on the GOP wants to repeal the Patient Protection and Affordable Care Act. They are all happy to haul out the old tropes about how the ACA is a job killing, anti-free market, mess and a government overreach. Many will be happy to explain how it’s all unconstitutional.

Meanwhile, every candidate on the Democratic side is defending the ACA, although some more enthusiastically than, well, at least one. Candidate Bernie Sanders has promised to introduce “Medicare for all” legislation (a euphemism for single payer) soon and would seek a single payer solution were he to become president. Yet even on the Democratic side, the topic of the ACA is pretty well hidden in their campaigns.

In fact, a quick survey of campaign web sites shows a remarkable lack of emphasis on health care reform by presidential candidates. On the Democratic side, health care reform doesn’t make the issues list on the campaign web sites of former Governor Martin O’Malley or Senator Bernie Sanders. Defending the Affordable Care Act is the ninth issue addressed by former Secretary of State Hillary Clinton’s web site.

On the Republican side Donald Trump is too busy bullying his opponents and the press to mention any issues other than immigration on his site. Health care reform makes Dr. Ben Carson list of issues, but he devotes just 98 words to the topic — and the only alternative he mentions is his support of health savings accounts. Former Governor Jeb Bush’s site is nearly issues free (there’s a white paper on his tax reform plan in the “news” section, but there is no “issues” tab). I couldn’t find anything about health care reform on the site. Then, I couldn’t find the issue (or any issues) on Carly Fiorina‘s or Senator Ted Cruz‘s sites, either.

Governor Scott Walker announces his intent to repeal Obamacare on his first day in office. And although I couldn’t find it on his web site, to his credit Governor Walker has offered a plan to replace the ACA. Senator Marco Rubio gets around to discussing health care reform on his web site after first mentioning 17 other issues while on Governor John Kasich‘s site it comes in at #3.

Given all that’s going on the world, it’s not surprising health care reform isn’t a driving issue. Which is remarkable. Health care reform arguably gave birth to the Tea Party movement. It cost Democrats the majority in the House in 2010 and helped chip away at their Senate majority until that was lost, too. In short, health care reform moved elections.

Now, not so much. The ACA is a part of America’s landscape now. Too many people are insured under the law to repeal it. Too much physical, digital and process infrastructure has been built out. Too many stakeholders are vested in the ACA continuing and opponents of the reforms have no coherent program to replace it.

This isn’t a bad thing. Because it opens up a real possibility that, once there’s a new President and Congress in 2017, they can accomplish something important: fixing the Affordable Care Act. The law has lots of flaws, but the debate since it’s passage has too often been an all-or-nothing affair: dump it or defend it. Yes, there’s been some tweaking around the edges of the legislation, but not the comprehensive review and modification that’s needed.

Finding Waldo can be hard. Finding a way forward to improve the ACA will be harder still. If little kids can find Waldo, perhaps there’s hope that what passes for adults in Congress can find common ground to improve the ACA. That’s still a long shot, but perhaps a bit more possible now than just a year or two ago.