Speaker 1: Please join me in welcoming to the show. Craig Gottwaals,
Speaker 1: aka the healthcare Guru. You know what, Craig, I don't
Speaker 1: actually have your website and stuff in front of me.
Speaker 1: I forgot to grab it, so we'll get to that
Speaker 1: in a little bit. But how are you, my friend?
Speaker 2: I am well, my friend, and you know, over here
Speaker 2: at our house, we've got candles going and we're really solemn,
Speaker 2: and it's hashtag prayers for Jack. I hope he got
Speaker 2: the horse paste that I sent over to him.
Speaker 1: Nah. I think he's going with more conventional care. But
Speaker 1: i'd ask you how the bass are biting. But it's
Speaker 1: so hot, it's like bass soup in the lakes. I'd
Speaker 1: imagine when it gets cooler, though, We've got to we've
Speaker 1: got to go fishing again.
Speaker 2: Yeah. Absolutely. It was one of the best springs in
Speaker 2: the last twenty years in northern California, so I expect
Speaker 2: fall will be similar.
Speaker 3: My friend, excellent, Okay, enough fish and talk.
Speaker 1: You sent along a slide show so I could get
Speaker 1: ready for this conversation, which I found very, very helpful
Speaker 1: and informative. I love the quote from Warren Buffett. Buffett
Speaker 1: medical costs are the tapeworm of American economic competitiveness. And
Speaker 1: it's shocking some of the information gave about the rise
Speaker 1: in healthcare costs over the last twenty twenty five years.
Speaker 3: You want to fill us in on some of that.
Speaker 2: Yeah, it's just devastating, Joe. You know, you guys have
Speaker 2: covered this story in out of Stockton, California, with two
Speaker 2: shop workers, two convenience store workers that are that are
Speaker 2: watching a guy pill for their store, and there's a
Speaker 2: there's a there's a guy commentating as he's filming, saying
Speaker 2: nothing you can do, nothing, you can do, And meanwhile
Speaker 2: this shoplifters filling a garbage can with cigarettes and all
Speaker 2: kinds of stuff. Finally, the shopkeepers they grabbed the guy
Speaker 2: and they just start beating his lower body and his
Speaker 2: legs with a stick. And I think that's that's basically
Speaker 2: where American employers are right now. They're just they're just
Speaker 2: totally fed up with the pilfering that's been going on
Speaker 2: on their bottom lines and American workers too. As we
Speaker 2: look at just go ahead, sorry, Joe, go ahead.
Speaker 1: Well no, that's okay. I just I want to get
Speaker 1: to those That's a great metaphor. I love that you
Speaker 1: send along a slide that in the year two thousand,
Speaker 1: the cost of family coverage who was about twenty percent
Speaker 1: of the tip book workers' annual salary, and now that
Speaker 1: twenty percent is fifty four percent, which is an astounding rise.
Speaker 2: It's just been it's something I've been in this in
Speaker 2: this industry, Joe full time for twenty two years now.
Speaker 2: And when I started twenty two years ago, everybody was saying,
Speaker 2: this is unsustainable, this is unsustainable. How can we how
Speaker 2: can we do this? And of course now we look
Speaker 2: at you know, average pay has gone up from thirty
Speaker 2: two thousand to forty two thousand dollars for the average worker.
Speaker 2: But like you said, healthcare, the cost of family coverage
Speaker 2: has gone from sixty five hundred to twenty two thousand,
Speaker 2: five hundred, so now it gobbles up fifty four percent
Speaker 2: of somebody's pay. One other stat just to keep the
Speaker 2: easy one to keep in mind, premiums are up just
Speaker 2: since the year two thousand, three hundred percent family premiums
Speaker 2: three times average worker pay only up one hundred percent.
Speaker 2: So it's just it's the hidden tax that we're all paying,
Speaker 2: and it's a slow depth seven and a half percent
Speaker 2: increases year after year after your year, when we're only
Speaker 2: getting one to two percent on our pay. And of
Speaker 2: course it's just it's just crushing workers and it's crushing businesses,
Speaker 2: and it's.
Speaker 1: Wildly out of proportion to other forms of inflation too.
Speaker 3: Correct.
Speaker 2: Oh, yeah, absolutely, yeah, I mean there's nothing healthcare. The
Speaker 2: only thing that rivals healthcare to other things your local
Speaker 2: electric company and your college tuitions. Those are the only stition.
Speaker 2: Yeah that keep up.
Speaker 1: Well, go ahead and take the ball and run with it.
Speaker 1: What's the next step in understanding your stuff? What do
Speaker 1: you have for us?
Speaker 2: Now? Many of us, many of us felt that Obamacare
Speaker 2: was going to really be hard on the insurance companies.
Speaker 2: You know, many of us thought that, Okay, you're putting
Speaker 2: all these restrictions in place, You're going to force all
Speaker 2: these extra people onto the plans without really good leverage,
Speaker 2: to keep them on the plans without without without necessarily
Speaker 2: getting a whole lot more money in premium. And I'll
Speaker 2: be the first to admit that is a topic on
Speaker 2: Obamacare about which I couldn't have been more wrong. Joe. So,
Speaker 2: if we just look back to two thousand and nine,
Speaker 2: when Obamacare was first you know, written just right before
Speaker 2: Obama signed it. You had you look at cost increases
Speaker 2: and stock increases since that time. So from two thousand
Speaker 2: and nine to today, just to look at the S
Speaker 2: and P five hundred as a benchmark, it's up four
Speaker 2: hundred and twenty two percent. That's the largest five hundred
Speaker 2: companies in.
Speaker 3: The US, right, Okay, got it?
Speaker 2: The average, the average of the five largest insurance companies
Speaker 2: medical insurers are up nineteen hundred percent over that same timeframe.
Speaker 2: So they were in on it the whole way. They
Speaker 2: had the game was rigged. They worked with the federal government,
Speaker 2: with hospitals, and with pharmaceutical industry to absolutely ensure that
Speaker 2: no matter what happened, they would remain profitable, they could
Speaker 2: keep the very large increases, and that we the taxpayer,
Speaker 2: would ultimately make them whole. We the taxpayer, and we
Speaker 2: the premium payer for those of us that still get
Speaker 2: insurance at work.
Speaker 1: So just for people who aren't taking notes or driving
Speaker 1: or what have you. So the SNP or the insurance
Speaker 1: the average of the insurance carrier stock prices has more
Speaker 1: than quadrupled the rise of the S and P five
Speaker 1: hundred as a whole, which is crazy. Now, those of
Speaker 1: us who believe in free markets are not shocked that
Speaker 1: when the government became involved in a ginormous part of
Speaker 1: the American economy, the rent seeking began, the lobbying began,
Speaker 1: and the big powerful companies ended up getting a huge
Speaker 1: disproportionate share of taxpayer money in a way that the
Speaker 1: free market would never have allowed.
Speaker 2: Would you agree, totally agree, that's exactly what happened. There
Speaker 2: have now been books written on this topic, and it
Speaker 2: just turns out that every single industry, whether you're looking
Speaker 2: at hospitals, insurers, brokers, even my industry, the pharmaceutical industry,
Speaker 2: every single one of us had a lobbying group in
Speaker 2: DC prior to two thousand and nine. We all, all
Speaker 2: of our lobbying groups worked with the federal government, worked
Speaker 2: with the Obama administration, and we as a combined entity,
Speaker 2: ensured that no matter what happened, we would be made
Speaker 2: whole and taken care of in this process. And that's
Speaker 2: exactly what's happened. Everybody's getting filthy rich on the provision
Speaker 2: of health insurance while American businesses and in US workers
Speaker 2: are struggling now to pay the bill, to the point
Speaker 2: where the average worker sees more than half of their
Speaker 2: pay go to premiums.
Speaker 3: What's America's number one lobby.
Speaker 2: Number one lobby, as reported by Axios is healthcare seven
Speaker 2: hundred million in twenty twenty one, the last reported stat
Speaker 2: I saw.
Speaker 1: One year seven hundred million dollars in bribes.
Speaker 2: Essentially, yeah, exactly exactly. And the largest client of the
Speaker 2: healthcare industry is the federal government, primarily through Medicare and Medicaid.
Speaker 2: So see here's this is where you get the crazy
Speaker 2: hidden tax that we've talked about here before, and that's
Speaker 2: the politicians don't want to just start increasing taxes willy
Speaker 2: nilly because that's bad for reelection, so they keep Medicare
Speaker 2: and Medicaid on a path where those reimbursements only typically
Speaker 2: go up about one percent per year, even though true
Speaker 2: medical inflation is roughly four percent per year. So then
Speaker 2: what happens is hospitals have to work with insurance companies
Speaker 2: to negotiate seven or eight percent renewal increases for employers
Speaker 2: to cover the fact that they're not making as much
Speaker 2: money as they would like to make for Medicare and Medicaid.
Speaker 2: The number one customer of the insurance industry.
Speaker 1: Right, So, okay, so the government is under the government
Speaker 1: is underpaying, so private insurance has to weigh.
Speaker 3: Overpay for medical care.
Speaker 1: You know, I think I know the answer to this,
Speaker 1: But why do the private insurance companies put up with it?
Speaker 1: Is it because they can go ahead and go out
Speaker 1: just for premiums and we don't see any alternative to
Speaker 1: pay in them.
Speaker 2: Oh? Absolutely, because the more premium we pay, the more
Speaker 2: they make as well. Obviously, right, the more the broker makes,
Speaker 2: the more the insurance company makes, the more the hospital makes.
Speaker 2: So what you really see happening in healthcare generally is
Speaker 2: hospitals will mark up the cost of a procedure. And
Speaker 2: again this is just hospitals, not doctors. The problem is
Speaker 2: not typically with your local doctor office, it's with facilities.
Speaker 2: So hospitals will say we're going to pay three hundred
Speaker 2: percent of what Medicare would pay for that shoulder surgery
Speaker 2: as an example, and that is roughly six hundred percent
Speaker 2: of our actual costs. And you say, well, Craig, how
Speaker 2: do you know their costs? Well, in order for them
Speaker 2: to receive money from the federal government through Medicare, they
Speaker 2: have to self report their costs. So I know exactly
Speaker 2: what their real costs are, and I know what Medicare pays.
Speaker 2: That's all public information. So what happens is private employers
Speaker 2: are basically paying It works out too roughly twenty dollars
Speaker 2: per employee per month. You're paying for the privilege of
Speaker 2: a fifty percent discount on something that's been marked up
Speaker 2: six hundred percent. And now that's a lot of numbers,
Speaker 2: but that's what's going on. Is you have this shell game,
Speaker 2: you have this this obscured price tag that's hidden that says, hey,
Speaker 2: the cost of that shoulder surgery is is you know,
Speaker 2: we will just say it's two hundred thousand dollars and
Speaker 2: then but you know, good news, good news, we're going
Speaker 2: to give you a fifty percent discount. With your large
Speaker 2: insurance plan, you're only going to have to pay one
Speaker 2: hundred thousand dollars. But then when you get down to
Speaker 2: the nuts and bolts of it, the actual cost to
Speaker 2: provide that surgery is like twenty thousand dollars.
Speaker 3: Wow.
Speaker 2: So on a large scale in our health plans.
Speaker 3: Wow.
Speaker 1: Meanwhile, the government's paying a tiny fraction of that, like,
Speaker 1: you know, way down less than you know, the hospital
Speaker 1: could stay in business.
Speaker 3: Probably on.
Speaker 2: Well, well, I want to yeah, I want to be
Speaker 2: careful about that. So I have a number of hospital clients,
Speaker 2: and I speak with these CFOs regularly, and pretty much
Speaker 2: across the board, every hospital chief financial officer will tell
Speaker 2: you we can survive on Medicare. What Medicare, that's the
Speaker 2: one we pay for the old timers. I mean, we
Speaker 2: would have to tighten our budgets, we would have to
Speaker 2: run more efficiently, we would have to we would cut
Speaker 2: out some waste and abuse. But we can probably get
Speaker 2: by at Medicare. It's Medicaid the one that we can't
Speaker 2: because that on average across the country pays about twenty
Speaker 2: percent less than Medicare. So now you are getting into
Speaker 2: a position where you're like fifteen percent under their real costs.
Speaker 2: So it's Medicare that causes the problem. Medicare. Excuse me, Medicaid, Medicare,
Speaker 2: most hospitals can get by it.
Speaker 3: Bass fishing tip number one. Slow down. He's always telling me,
Speaker 3: slow down, don't slow down.
Speaker 2: Let him come to it anyway, Right when you get
Speaker 2: to the point where you think you cannot go any slower,
Speaker 2: slow at the hell that.
Speaker 3: I'm a little bit more, all right, beautiful.
Speaker 1: So if you want to get in contact with Craig
Speaker 1: for bass fishing tips or advice on healthcare and benefits
Speaker 1: and that sort of thing, all the informations going to
Speaker 1: be at Armstrong and Getty dot com will make it
Speaker 1: easy to follow. Plus this discussion will be edited up
Speaker 1: into an Armstrong and Getty.
Speaker 3: Extra Large podcast.
Speaker 1: Having said that, I'm looking at the map you sent
Speaker 1: of employer payments for a given medical procedure as a
Speaker 1: percentage of Medicare you poor chumps? We poor chumps with
Speaker 1: private insurance in California are paying three hundred and eleven percent.
Speaker 1: In Texas it's a mere two hundred and sixty nine percent,
Speaker 1: three hundred and sixteen percent.
Speaker 3: Is that Colorado or Nebraska?
Speaker 1: Rather, it's three hundred and four percent Washington State, On
Speaker 1: and on and on and then the slide you sent
Speaker 1: about the fair price for a CT scan, for instance,
Speaker 1: in the San Francisco Bay area, can you explain that
Speaker 1: to us?
Speaker 2: Yeah, so you exactly nailed it, Joe. Across the country,
Speaker 2: we're roughly we have if we're in that thirty percent
Speaker 2: of people that are roughly paying for our own health care,
Speaker 2: there's only about thirty percent of us in that boat anymore.
Speaker 2: We pay three times what the federal government pays with Medicare,
Speaker 2: and hospital CFOs will tell you we can we can
Speaker 2: make money on Medicare. Okay, So hospital CT scan, So
Speaker 2: this is just I sent you a couple examples as
Speaker 2: will just walk through one of them. This is a
Speaker 2: real hospital in the Bay Area. We won't name any names.
Speaker 2: They bill an average of thirty five hundred dollars for
Speaker 2: a CT scan, and.
Speaker 3: They're the cheapest one in the chart.
Speaker 2: But go ahead, they're the cheapest on the chart, that's right.
Speaker 2: They self report the cost of that two hundred and
Speaker 2: fifty four dollars. Okay, Medicare applies its formula, so they
Speaker 2: do a little bit of markup on the cost. Typically,
Speaker 2: and the Medicare would pay three hundred and three dollars
Speaker 2: for that procedure. But the average national insurance company of
Speaker 2: which there are four or five depending on how you
Speaker 2: count them, would would give you a fifty percent discount
Speaker 2: off of that pie in the sky fantasy unicorn riding
Speaker 2: cotton candy eating build rate of thirty five hundred, So
Speaker 2: they would they would reimburse seventeen hundred for that thirty
Speaker 2: four hundred or thirty five hundred, whatever you whatever you
Speaker 2: want to call it. So you know, you look at
Speaker 2: the bill, you think, wow, it's thirty five hundred. I'm
Speaker 2: going to pay seventeen fifty. I'm getting fifty percent off.
Speaker 2: That's awesome until you find out Medicare pays three hundred
Speaker 2: and three dollars. And I tell you that facility operators
Speaker 2: tell you, yeah, we can make money on Medicare.
Speaker 1: Yeah, it's like your babysitter walks in and says, normally
Speaker 1: I charge one hundred bucks an hour, but I'll let
Speaker 1: you go for fifty or whatever. And you're thinking, oh,
Speaker 1: a fifty percent discount. Not boy, I'm a chump. And
Speaker 1: the important thing to realize, and I'm looking at the clock.
Speaker 1: I think next segment we will get to the solution
Speaker 1: because we barely have two minutes. But what people need
Speaker 1: to understand is that you're paying twice, three times, four
Speaker 1: or five six times as much as a Medicare patient does,
Speaker 1: which still gives the medical provider a fair amount of profit.
Speaker 1: And that enormous difference that you're paying in premiums and
Speaker 1: everything that is a tax, that is money from you
Speaker 1: going to pay for a government program, and I don't
Speaker 1: think people really comprehend it that simply. Meanwhile, and if
Speaker 1: you're just tuning in, we mentioned this last segment, the
Speaker 1: insurance companies are making scads of money because they're in
Speaker 1: bed with the government on the scheme, and really the
Speaker 1: only loser is the private insurance consumer.
Speaker 3: Am I correct?
Speaker 2: You've got it better than any media person ever has.
Speaker 1: Wow Wow gold star for me any anyway, So in
Speaker 1: thirty seconds, can you describe slash tease what we're going
Speaker 1: to talk about in the next segment, the cure to
Speaker 1: this or reference based pricing?
Speaker 2: Yeah, reference based pricing, fair market pricing, value based pricing.
Speaker 2: There's a lot of different names for it because it
Speaker 2: is so new and revolutionary. In a nutshell, if you
Speaker 2: take the premise that they can make money on medicare,
Speaker 2: what happens if we go ahead and just offer to
Speaker 2: pay one hundred and forty percent of medicare, which is
Speaker 2: still half of what your employer plan pays. We can
Speaker 2: cut our costs darn near half at that point, right.
Speaker 2: What happens if we do that? What kind of acceptance
Speaker 2: will we get in the marketplace if we decide to
Speaker 2: pay forty percent more than their largest customer, which is Medicare.
Speaker 1: Your health insurance costs have skyrocketed.
Speaker 3: Compared to the rate of inflation.
Speaker 1: Your insurance premiums have skyrocketed since Obamacare passed. All those
Speaker 1: costs to people with private insurance through their employer whatever
Speaker 1: have gone sky high compared to inflation. Meanwhile, the profits
Speaker 1: of the insurance carriers have been quadrupled the rise of
Speaker 1: the S and P five hundred. They're making unimaginable amounts
Speaker 1: of money off of you as you subsidize Medicare and Medicaid.
Speaker 1: It's a hidden tax. You're paying hundreds or thousands of
Speaker 1: dollars a year to pay for those government programs.
Speaker 3: But it's not a tax.
Speaker 1: It's your insurance premiums because your insurance company pays sky
Speaker 1: high prices to the hospitals to cover, you know, the
Speaker 1: government programs to make sure everybody makes plenty of profit.
Speaker 1: And nobody's talking about this. Did I get anything wrong
Speaker 1: in that description, Craig.
Speaker 2: No, you do so good at that, Joe, I would
Speaker 2: just the only nuance I would add is that is
Speaker 2: that it's not just because of government underfunding, which we
Speaker 2: know it certainly is with respect to Medicaid for sure,
Speaker 2: but it's also because, hey, what this private industry likes
Speaker 2: to do. It likes to maximize profit. So pharmaceutical companies, hospitals, insurers,
Speaker 2: and brokers are all maximizing profit on this hidden tax
Speaker 2: that's obfuscated by the fact that typically people don't see
Speaker 2: the prices they pay for healthcare. They don't know. They
Speaker 2: just know their paycheck isn't what it should be. And
Speaker 2: so one of the things that's made this more possible
Speaker 2: in the last few years. Joe Is and you and
Speaker 2: I and Jack did a podcast about this probably four
Speaker 2: years ago now where Trump put in some transparency rules
Speaker 2: and then thankfully when Biden came into office he kept them.
Speaker 2: So there's and I think I told you way back then.
Speaker 2: I said this is going to be a landslide. This
Speaker 2: is going to change healthcare forever, and now we're finally
Speaker 2: starting to see it. That's what's going on. These employers
Speaker 2: are taking that wooden bat like those gents in the
Speaker 2: in the convenience store in Stockton, and they are starting
Speaker 2: to whack away at this system that's been pillaging them
Speaker 2: for so long.
Speaker 1: Okay, and there's there was one more nuance I wanted
Speaker 1: to get to it flitted out of my mind. Dang
Speaker 1: it about the whole Oh, it doesn't matter. So so
Speaker 1: because of that transparency that Donald J. Trump, God rests
Speaker 1: him or God bless him, He's not dead because of
Speaker 1: that transparency. Now that's given a tool. Oh you know
Speaker 1: what I was going to say was, so you've got
Speaker 1: all that profit being made, maximizing the profit in the
Speaker 1: insurance companies, the hospitals whatever. I'm pro profit, and I
Speaker 1: know you are too. We're pro the free market. But
Speaker 1: this is the last thing. This is the free market.
Speaker 1: It's accommodation of monopolies. And then the government so heavily involved.
Speaker 1: The companies have to beg and lobby the government, and
Speaker 1: they're all in on it together.
Speaker 2: It's a government healthcare complex because and I'll tell you
Speaker 2: what made this made Obamacare so bad, Joe. Prior to Obamacare,
Speaker 2: Democrats generally wouldn't take money from the pharmaceutical industry and
Speaker 2: from big insurers. That was kind of a thing Democrats
Speaker 2: wouldn't do. Well. Obama changed all that because Obama realized
Speaker 2: that to get this legislation passed, he was going to
Speaker 2: have to take that money from those players and so
Speaker 2: once those floodgates opened, once you had okay, now Republicans
Speaker 2: and Democrats can dip their hands into the largest industry
Speaker 2: in America and just take as much as they want
Speaker 2: from lobbyists, then you had the complete proliferation of all
Speaker 2: of this, I would say, corruption influencing any regulation or
Speaker 2: laws we might have had.
Speaker 1: Ok So, let's get back to the transparency that Trump
Speaker 1: introduced and Biden continued, Now, you know the hospital self
Speaker 1: reported costs and stuff.
Speaker 3: So how has that been helpful? How's that been a tool?
Speaker 2: Well, so what has happened is, and here's the free market.
Speaker 2: There are entities called reference based repricers that have popped up,
Speaker 2: and what they're doing is they're aggregating that data and
Speaker 2: they're saying, Okay, we know at Hospital X, a rotator
Speaker 2: cuff surgery is actually costs We'll say fifteen thousand dollars
Speaker 2: and Medicare would pay twenty thousand dollars for it, but
Speaker 2: their typical insurance company is giving them sixty thousand for it. Right,
Speaker 2: So they're saying, Okay, don't pay an insurance company, pay us.
Speaker 2: What we'll do is we will reprice that claim. We
Speaker 2: will pay the claim for you, and we'll negotiate with
Speaker 2: the provider if you get pushedback. And so we're reference
Speaker 2: based repricing these claims. We're just cutting out insurers all
Speaker 2: together because we're saying, no, the employer's going to self
Speaker 2: insure this plan and we're going to pay at one
Speaker 2: hundred and forty percent of Medicare instead of three hundred
Speaker 2: and ten percent of Medicare.
Speaker 1: So the hospital is not they're not making that same
Speaker 1: crazy profit, but they're making profit. You say, it's working
Speaker 1: to what extent our hospital's saying, okay, we'll do that
Speaker 1: for that price.
Speaker 2: Yeah, So depending on what part of the country you're in,
Speaker 2: you get, we would say is one percent to ten
Speaker 2: percent pushback. And when I say pushback, I mean the
Speaker 2: hospital says, hey, no, one hundred and forty percent of
Speaker 2: Medicare is not enough. We need more, we want more.
Speaker 2: Then we get involved in negotiation. Once we get involved
Speaker 2: in negotiation, it's ninety nine percent acceptance. And the worst
Speaker 2: case scenario for the employer is they capitulate and they
Speaker 2: pay what the giant insurance company would have paid.
Speaker 3: Anyway, you see, if it almost never happens.
Speaker 2: Well very rarely. Yeah, that you're talking about a handful
Speaker 2: of claims per year for hundreds of employees. Yeah, because ultimately,
Speaker 2: what you're doing is you're saying, hey, hawk, I'm going
Speaker 2: to pay you forty percent more than your largest customer.
Speaker 2: And if the hospital really wanted to dig in their
Speaker 2: heels and say sue the member, sue the plan or
Speaker 2: the employee for not paying more, ultimately you're going to
Speaker 2: end up in a court of law and the CFO
Speaker 2: at the hospital is going to have to testify that
Speaker 2: somebody offering to pay forty percent more than their largest
Speaker 2: customer is an unreasonable price and they need to do it.
Speaker 2: And even then, we negotiate up to three hundred percent anyway,
Speaker 2: so they would have to argue that three times what
Speaker 2: Medicare pays is unreasonable and they can't. There's been one
Speaker 2: case that went to the Merrit's Supreme Court of Colorado
Speaker 2: and the hospital lost. So now you've got floggates. We've got,
Speaker 2: like I said, instead of four or five national carriers,
Speaker 2: we've got ten different repricers that have popped up. And
Speaker 2: this is the wild West shoe. It is absolutely crazy
Speaker 2: what I see going on, but in a good way,
Speaker 2: in a wonderful way. Now this is the free market.
Speaker 2: You've got these repriss that have popped up. You've got
Speaker 2: employers who are early adopters grabbing that stick and willing
Speaker 2: to whack up the person that's been pilfering them. And
Speaker 2: we're cutting employer claim costs in half, and then once
Speaker 2: you bake in all the other costs we have to
Speaker 2: have for reinsurance and repricers, employers who do this are
Speaker 2: saving twenty five to thirty five percent year one every time,
Speaker 2: and they're not losing access to any providers. The message
Speaker 2: to employees is, hey, if you guys insist upon going
Speaker 2: to the top five or ten percent of providers in
Speaker 2: your zip code, you're going to probably have to pay more.
Speaker 2: But for ninety percent of you, you're going to see
Speaker 2: no change to your plan at all other than we're
Speaker 2: going to charge you a heck of a lot less
Speaker 2: for it.
Speaker 1: Well, and that's about the average work in man and woman.
Speaker 1: I mean, that's where you bring it home, because you know,
Speaker 1: and people will understand basic economics.
Speaker 3: Get this.
Speaker 1: If my employer has to pay through the nose for
Speaker 1: my health insurance, it's great that they're doing it, but
Speaker 1: that comes out of my potential salary. It all comes
Speaker 1: out of my pocket. The part I pay comes out
Speaker 1: of my pocket, and the part my employer plays comes
Speaker 1: out of my pocket. Because there's a certain amount you
Speaker 1: are worth to your employer, and instead of it going
Speaker 1: to you, it's going to some insurance company.
Speaker 3: Would you agree totally?
Speaker 2: It's just total compensation, your compensation, Zach. And the problem
Speaker 2: is right now, fifty something percent of that's going to healthcare,
Speaker 2: when just twenty years ago it was thirty percent of it.
Speaker 1: So as a small business person, I'm just I want
Speaker 1: to make sure this is clear to me. This is
Speaker 1: this reference based pricing or whatever you want to call it.
Speaker 1: It's mostly helpful to companies that are big enough to
Speaker 1: like self ensure pay their own claims.
Speaker 2: Yeah, so so people ask me for a head Can
Speaker 2: I say, general, two hundred and fifty plus employees. We
Speaker 2: can probably do this depending on where you are. And
Speaker 2: now some companies are smaller than that, they're already self insured.
Speaker 2: You can do it right now, but you roughly need
Speaker 2: two to three hundred employees to get enough to get
Speaker 2: enough volume to be predictable, to get stop loss, et cetera.
Speaker 2: So it's this is not a solution for you know,
Speaker 2: a sub one hundred company.
Speaker 1: Yeah, okay, fair enough, since I'm not in this business
Speaker 1: and certainly don't make any money talking about this, is
Speaker 1: there any way you could see using these same forces
Speaker 1: to help out, you know, employees of small companies, self
Speaker 1: employed folks down the road.
Speaker 2: Yeah, because what's happening is and again, we're so on
Speaker 2: the front end of this. Just a year ago, less
Speaker 2: than two percent of companies we're doing this. Now it's
Speaker 2: three percent of companies, and people like me are out
Speaker 2: there hitting it hard and I'm busier than I can stand, Joe,
Speaker 2: because it's growing so fast. But what's happening is we're
Speaker 2: negotiating real prices, we're putting transparency on it, and ultimately
Speaker 2: we're going to be developing new provider network that will
Speaker 2: work for one hundred and forty percent of Medicare, so
Speaker 2: that that small company can just do a direct contract
Speaker 2: with the two hospitals in their neighborhood at one hundred
Speaker 2: and forty percent of Medicare instead of three hundred and
Speaker 2: ten percent of Medicare. So this will trickle down eventually
Speaker 2: because we're shining a spotlight on the problem we've had
Speaker 2: for fifty years in healthcare, and that's that we never
Speaker 2: knew what the prices were.
Speaker 1: I've known Craig for many, many years, and you get
Speaker 1: so excited when you get a chance to stop the
Speaker 1: government screwing people well, and certain private companies that are
Speaker 1: in bed with the government. It's kind of fun to watch.
Speaker 1: That's one of the reasons we're old friends. Craig, thank
Speaker 1: you so much for the time. We appreciate the thoughts
Speaker 1: and then the expertise.
Speaker 2: Appreciate it. Joel can't wait to see you again.
Speaker 1: All right, thanks buddy. All right, Yeah, we'll talk soon.
Speaker 1: So if you want to ask questions or whatever. Craig's
Speaker 1: contact information is at Armstrong and Getty dot com.
Speaker 2: Armstrong and Getty