Archive for Tom Emerick

The final post…probably

Dear Loyalty Readers of Cracking Health Costs,

You haven’t heard much from me lately and I owe you an explanation. In all likelihood this will be my last post on this blog. I am not retiring in any sense but just plan to spend more time on execution and less on generating information.

The main reason I started this blog and the reason I wrote my books was that I had messages to deliver. The messages were that companies should focus on the outliers, the 6% of enrollees who spend 80% of plan dollars; company sponsored wellness, while popular, is largely ineffective; and there are extreme differences between providers of secondary and tertiary care in America, differences that can be leveraged to the advantage of health plan enrollees and plan costs.

More and more people have accepted these notions. Thus my purpose for writing has become more or less fulfilled. I’ve written nearly 700 articles, a few of which, thanks to other sites that reposted my articles, had hundreds of thousands of views globally. Writing those articles was satisfying but hard work.

I enjoyed getting comments from readers, some from as far away as New Zealand and Germany. This blog helped me cross paths with numbers of terrific and dedicated people. I will truly miss that.

Al Lewis and I wrote a book named after this blog, Cracking Health Costs, which become an Amazon trade best seller. If you bought the book, many thanks.

There’s extremely wide variation in how healthcare is delivered in America. There is perhaps even more variation in how dental care is delivered. I have cofounded a company called Bold Dental. We are in the process of building a chain of very high-quality and highly ethical dental clinics in the US. I really truly enjoy this kind of work.

I turn age 70 this year and a been dealing with healthcare for 42 years. My future endeavors promise to be enjoyable and some will be outside of the realm of healthcare.

We live on a 100 acre hilltop on the Ozark Plateau that adjoins a huge national forest. One of my hobbies is off-trail hiking. It is truly amazing what you find if you get off the trails and explore, or to paraphrase Robert Frost, take the path less travelled.

Thank you for reading my articles.


Tom Emerick

Huge ACA rate hikes explained in 100 words or less

ACA permits people to sign up even if they are already sick. Real insurance cannot work that way.

Imagine an Accountable Fire Insurance Act that required insurers to sell you fire insurance after your home had burned. Homeowner insurance rates would skyrocket. Anyone who carefully read the ACA would see that coming.

The big insurers knew this would happen but played along in the beginning to avoid attracting political fire.

When 75% of Americans get a taxpayer subsidy under ACA, it isn’t really insurance but more of an income redistribution mechanism…for better for worse.

There it is, 97 words.

Walmart Expands Center of Excellence Program

Walmart is expanding its popular and successful Centers of Excellence program. See the recent press release below signed by Sally Welborn, Walmart’s executive charge of benefits. Walmart, a true leader in benefit innovation, is taking the next right step in the evolution of Centers of Excellence.

When Walmart workers, called associates, use Centers of Excellence, deductibles and copays are waived…plus all expense paid travel for the patient and a companion.

Starting next year, if covered folks at Walmart have spine surgery outside of a Center of Excellence it will be considered out of network and paid at only 50%.

This is a huge step and is reminiscent of the early days of PPOs, Networks, and HMOs.  Most began as programs that if you got care at PPO provider your deductible and co-pay was waived. In a few short years those programs evolved into ones that paid regular benefits with deductibles, etc., if you used PPO doctors, but applied higher deductibles and copays if members went out of network. Of course in most HMOs, if members went out of network, nothing was paid.

What Walmart is doing now, while a very logical extension of what benefit plans have been doing for over 30 years, is a huge step forward in truly controlling waste, over treatment, and misdiagnoses in health plans.

Kudos to Sally and her team for leading the way.

Here is the press release:


The Right Care at the Right Time: Expanding Our Centers of Excellence Network
Starting next year, Walmart will double the number of world-class medical facilities available to our associates who have been told they need a spine surgery. Whether you’re a cashier in Wyoming who’s been with the company for six months or you’re a 20-year associate running a store in Miami, if you have Walmart health insurance, you have this benefit.

We are adding the Mayo Clinic facilities in Arizona, Minnesota and Florida to our current list of Centers of Excellence (COE) for spine surgeries, which are Mercy Hospital Springfield in Missouri, Virginia Mason Medical Center in Washington and Geisinger Medical Center in Pennsylvania. Our COE program is about more than just access to these facilities and their specialists; it covers these procedures at 100%, including travel, lodging and an expense allowance for the patient and a caregiver.

Why would Walmart offer a benefit like this? It’s pretty simple – we care about our people and want them to receive the right care at the right time.
Walmart started offering this benefit in 2013 and our data tells us we are making a difference for our people, but we want to do more. That’s one of the reasons for adding more eligible medical facilities to the program. Other reasons these medical facilities were selected are that each facility:

  • Fosters a culture of following evidence-based guidelines, and as a result, only performs surgeries when necessary.
  • Structures surgeons’ compensation so they are incentivized on providing care based on what’s most appropriate for each individual patient and looking at surgery as a last option.
  • Is geographically located throughout the country to provide high-quality care to participants in one of Walmart’s health benefits plans.

Why would Walmart offer a benefit like this? It’s pretty simple – we care about our people and want them to receive the right care at the right time.

Research, as well as our own internal data, shows about 30% of the spinal procedures done today are unnecessary. By utilizing the Centers of Excellence program, our associates are assessed by specialists who are incentivized differently to get to the root cause and prescribe appropriate treatment.

Our associates are very important to us, and we want to make sure they and their families receive the highest level of quality care available.
Preventing a surgery that someone doesn’t need is only part of our Centers of Excellence. The other, even more important aspect is making sure our people receive the right diagnosis and care plan for their pain. In The New Yorker, renowned surgeon and public health researcher Atul Gawande underscored the importance of this approach:

“It isn’t enough to eliminate unnecessary care. It has to be replaced with necessary care. And that is the hidden harm: Unnecessary care often crowds out necessary care, particularly when the necessary care is less remunerative. Walmart, of all places, is showing one way to take action against no-value care—rewarding the doctors and systems that do a better job and the patients who seek them out.”

Walmart is not alone in this approach to appropriateness of care. One example is the Choosing Wisely initiative, which is backed by recommendations from more than 70 specialty societies including the American Academy of Orthopaedic Surgeons, North American Spine Society and the American College of Surgeons. The stated purpose of Choosing Wisely is to help patients choose care that is supported by the evidence, not duplicative of other tests or procedures already received, free from harm and truly necessary – we couldn’t agree more.

To further encourage our associates to take advantage of this offering, next year, spine surgeries at one of our six Centers of Excellence medical facilities will continue to be covered at 100% with travel and lodging paid for the patient and a caregiver. If the surgery is performed outside of a COE facility, it will be considered out of-network and paid at 50% in most cases.

Our associates are very important to us, and we want to make sure they and their families receive the highest level of quality care available.

We have seen spine surgeries performed often when they are not necessary. By making these changes in our benefit offerings next year, Walmart wants to make sure that our associates and their family members are diagnosed correctly and that they get the best possible treatment.
— Sally Welborn, Sr. Vice President – Global Benefits, Walmart

Quizzify Succeeds Where Wellness Fails

My extensive first-hand experience with workplace wellness was always disappointing. There were never any savings, participation was low, employees didn’t like it, and administration was complex. During my tenure at both British Petroleum and Walmart, I tried various forms of wellness but to no avail.

When I began to focus on high-cost cases, we had great successes in direct contracting with providers and setting up medical travel programs.

I’ve continued to follow the wellness industry but could never see any genuine success stories. The gratifying news is that I’m not the only one to notice any more. The LA Times called wellness a scam while Slate just recently called it a sham. And Al Lewis, my co-author on Cracking Health Costs, would say they’re being polite. Most recently, he has noted that the 2016 Koop Award is going to a vendor whose own data shows they made employees unhealthier.

Speaking of Al Lewis, he has now entered the employee health field directly with Quizzify, which transforms the boring but long-overdue task of educating employees about health, healthcare, and their health benefit into an entertaining trivia game. As a colleague and co-author, I do need to disclose the obvious conflict of interest as I describe my impressions below, but don’t take my word for any of this. Just go play the sample short game right on the website, and ask yourself if you’re learning anything useful, right off the bat. Click here for a link to Quizzify.

Do you think your employees already know this stuff? It’s doubtful. Americans vastly over consume healthcare; it’s almost free at the point of service once the deductible is satisfied, and they are being bombarded with ads and marketing, as are their doctors. Nothing can solve this massive problem, but Quizzify can help, and is about the only vendor even trying. Backed by doctors at Harvard Medical School and a 100% savings guarantee, Quizzify provides a plethora of shock-and-awe, fully linked “counter-detailing” questions-and-answers that will educate even the savviest consumers of healthcare, and entertain even the dourest CFO. Nexium? Prilosec? Prevacid? You wouldn’t believe the hazards of long-term use. Then there is the sheer waste and possible harm of annual checkups, well-woman visits, PSA tests, and so on.

Speaking of hazards, CT scans emit up to 1000 times the radiation of an x-ray. Uninformed people are going clinics that will give them a “preventive” CT scan. If a doctor suggested patients have a series of a thousand x-rays for “preventive” reasons there would be a stampede out of the office.

On the other hand, there are instances where people should go to the doctor but they don’t. Swollen ankles? Painless, perhaps, but you may have a circulation problem, possibly a serious one. Blood in your urine but it goes away before you even make an appointment? That could be a bladder tumor tearing and then re-attaching itself, especially if you smoke. And show me one health risk assessment that advises people over 55 or 60 to get a shingles vaccine if they had chicken pox as a kid.

Then there are the health hazards of everyday life. Those healthy-sounding granola bars are full of sugars cleverly hidden in the ingredients labels. And whoever says vaping is safer that smoking better not be pregnant, because for pregnant moms, incredibly, vaping could be worse for the unborn baby. Just as with the shingles vaccine, chances are your HRA is silent on the texting-while-driving (TWD) issue while obsessing about seat belts, but TWD is by far the more underappreciated hazard.

Your HRA is probably also silent on the health risks of loneliness, poor spending habits, boredom, and most of the other major health risks Robert Woods, PhD, and I describe in our book, An Illustrated Guide to Personal Health. Quizzify has many questions aimed at improving spending habits, but if I had one complaint, it would be that (at least in the questions I’ve seen) Quizzify doesn’t address these risks we’ve described in this book.

One of the largest health risks workers have is being in a job you hate. You won’t see that question on anyone’s HRA either, or in Quizzify. That could lead to mass resignations in some pressure cooker companies.

Further, scores and scores of people have told me they fudge answers on HRAs anyway. Interestingly, they feel they are on the ethical high ground to do that because of the goofy, nosey, and intrusive questions they are asked to answer, e.g., asking about your pregnancy plans in the future. Quizzify, on the other hand, encourages people to cheat. They want you to look up the answers because that’s how you learn. So instead of denying human nature, they channel it.

Conclusion: if you offer old-fashioned wellness, walk, don’t run, to the nearest exit. If you want to look at something that shows huge promise, check out Quizzify.

When win win is lose lose

Workplace Wellness Programs Are a Sham, reads a good article in Slate by L.V. Anderson. This is a must read for people who remain true believers that workplace wellness will make an improvement in worker health.

The idea behind wellness programs sounds like a win-win“, writes Anderson. Alas, history is full of “win-win” ideas that were destructive, costly, or ineffective.

She describes the infamous “doublespeak” of Safeway CEO Stephen Burd’s description of success with Safeway’s wellness program. Writes Anderson, “As it turns out, almost none of Burd’s story was true.” (Regular readers of my blog will know I’ve written about the Safeway nonsense before.)

For decades everyone knew that an annual physical was a great way to stay healthy, but various studies, including the famous New England Centenarian Study have exposed that as a myth too.

Antibacterial soap anyone? Sounded like a great win-win, no? The FDA finally outlawed it. In my book, “An Illustrated Guide to Personal Health”, coauthored in 2015 with UNLV Professor Robert Woods, Chapter 4 was titled “Avoid Antibacterial Soaps and Gels.” Why? “Overuse of antibacterial soaps and gels can reduce the effectiveness of antibiotics you may need someday…they are helping create antibiotic-resistant germs.”

Back to wellness failures. Companies in the US have spent huge dollars trying to keep employees healthy through methods that are shams. It’s time to move on.

I immodestly include the following quote from Anderson’s article, “You might think of Al Lewis, Vik Khanna, and Tom Emerick as the Three Musketeers in the fight against wellness programs.“* Al and I are co-authors of the Amazon best seller, “Cracking Health Costs”, named after this blog, that describes flaws in typical corporate wellness schemes, which while profitable to wellness vendors are useless at best and can actually be harmful to workers health at worst, not to mention the inconvenience and costs of going to doctors for all that screening. Concerns about wasted productivity, anyone?

How can wellness programs harm worker health? One way is by promoting gross over-testing and excessive screening by tools that have very high error rates and rates of false positives, e.g., PSA screens.

One good byproduct of dumping your wellness program is to avoid all the costly and burdensome reporting ACA requires. Yet another good byproduct is letting your employees do their work at work instead of spending non-productive time every year in wellness lectures, filling out health risk assessments, reading wellness-related emails and brochures, etc., etc., ad nauseum.

How can “wellnessophiles” in companies truly believe that their employees don’t already know that smoking, overeating, lack of exercise, and excessive consumption of concentrated sugars are not good for them? Do they truly believe that the employees’ doctors haven’t already addressed those issues…not to mention public service announcements, health classes in high school, and so on? Do they think their employees who smoke have never noticed warning labels on cigarette packs?

I meet a lot of people from various walks of life. Occasionally I ask them if their employer has a wellness program and, if so, what do they think about it. The typical first reaction is they roll their eyes. The most common comment is that the company’s wellness program is “just another [insert unflattering adjective here] HR program”. That’s usually followed by comments best described as lampooning the programs, as in “you’re not gonna believe this but…” type of comments.

Interestingly I meet HR executives who admit their wellness program are ineffective and costly, yet they cling to them. They usually give one of two reasons. One is that they don’t want to admit that their program is a big waste of money. Another common rational is some version of “Too many of our employees are unhealthy; we gotta do something.” (I put that in roughly the same category as, “the beatings will continue until morale improves.”) That line of thinking is bureaucracy at its worst. You would never spend your own money that way…or maybe they would?  Hmm.

I get asked, if not wellness then what? My reply is anything that might actually save money and/or get better care for your workers, e.g., centers of excellence and direct contracting with providers. There is some promising work on reference-based pricing and better pharmacy management. Also I believe we may have a surge of international medical travel in the future too, especially to places like Health City Cayman Island (HCCI), about an hour’s flight from Miami and one of the best quality hospitals and clinics in this hemisphere. I have visited HCCI a number of times and met a number of their surgeons. They are excellent.

For the record I tried various forms of wellness in my career of running large sell-insured plans. I tried to make them work but in the end none of them were effective and some actually drove up health costs in a way a steely-eyed CFO would quickly understand. For about half my career I reported through the CFO chain, not HR. CFO’s really get the numbers and ask the tough ROI questions.

HR executives take note…you can increase your status and respect if you just get out of wellness. Again, it’s time to move on. While wellness at work was a noble notion and one that made sense to many on the surface, it’s time to “fess” up to your bosses. They will appreciate your message and appreciate the reduction of wasteful spending.


Tom Emerick

Tom’s latest book, “An Illustrated Guide to Personal Health”, is now available on Amazon.

*For further information on this topic see the They Said What blog by Al Lewis and Vik Khanna. Their blog is both enlightening and entertaining.

The business of healthcare

In this article by Tom Emerick and David Toomey, founders of Thera Advisors, we describe a new view of business of healthcare.


Let’s face it, healthcare is a big business – it’s 17.5% of our GDP and expected to be at 20% by 2025. For the physicians and hospitals, the competition is on for the “under 65” patient as that payment is generally 150+% higher than a Medicare patient.

As a business owner, the healthcare suppliers have to determine if their pricing model is to offer a low price per service based on a higher volume, a high price per service based on a lower volume, or somewhere in between. Of course, you can have the occasional healthcare supplier charging a very high price per service with the goal of a higher volume. Yes, the insurance carriers will do their best to negotiate a competitive price per service with each supplier, but the reality is that there is up to a 300% price variation by a line of service amongst network providers.

The healthcare suppliers also have the option to just deal directly with the patients and not participate in a carrier’s network, and this scenario is more common with niche facilities and specialty providers. For facility-related expenses, there is not a Reasonable & Customary (R&C) reimbursement level, so out-of-network facilities are generally reimbursed at their higher submitted amount. There is a movement to implement a cap tied to a Medicare percentage for these types of scenarios, and more employers are adopting this option.

Once the healthcare suppliers define their pricing model, the next objective is to increase patient flow, which drives revenue. As seen with other industries, there are a number of initiatives to influence the healthcare buyers’ behavior. If you drive down a highway, it’s always interesting to see the number of healthcare billboards, and we are also seeing an increase in TV commercials. Some physicians have invested in their own facilities and specialty services, and they can drive patient volumes by scheduling procedures at their centers. In addition, a few providers may give patients financial incentives to use their services and facilities.

In a recent landmark decision, Cigna was ordered to pay an out-of-network provider more than $13 million to cover certain alleged underpaid claims and ERISA penalties. ERISA is the Federal law governing large employers who self-insure their medical plans (generally those with over 250 employees). In the lawsuit, Cigna made allegations that the supplier was failing to collect the patients’ deductibles and coinsurance, and this provider was accepting as “payment in full” the amount processed by Cigna on behalf of the employer. The Summary Plan Documents (the carrier’s contract with the employer and the employee) state that “the plan” covers a percentage of the bill, and the insured has a financial responsibility as well. Cigna took the position that if the healthcare supplier does not collect any payment from the patient, the plan has no payment due since the provider’s bill is to be a shared financial responsibility between the patient and the plan – if patient’s portion is waived, the plan’s portion is waived as well. The carriers’ intent is for the supplier to collect the deductible and coinsurance from the patient, so there is awareness of the supplier’s charges and of their shared responsibility for the bill.

When suppliers “forgive the patient liability”, these healthcare providers often have a revenue model of very high prices with the goal of higher volumes. Their mentality is that they’ll entice the patient to use their services since the patient does not have to pay anything, and the payment received from “the plan” will more than cover the patient’s forgiven liability.

Even though the average employee deductible is high at $1,300, most patients have not grasped that healthcare suppliers are running a business and that prices vary. While the employee (the patient) may save money when the provider waives their financial responsibility, they lose in the end as their employers’ costs increase, resulting in higher health insurance cost share with larger deductibles and payroll contributions for all employees.

The Court rejected Cigna’s claims denial for this provider, who allegedly forgave the patient’s financial liability. This ruling creates further risk to the affordability of healthcare for employers, as employees will be financially motivated to access care from suppliers with higher prices since the patient’s liability is forgiven. Can we expect other healthcare suppliers to implement a revenue model tied to high prices with no patient liability?

In speaking with a number of healthcare suppliers, many do not realize that most large employers self-insure their medical plans, and they perceive that the insurance carriers covers the costs. For us to solve this disconnect, the purchasers (the employers) have the opportunity to engage the healthcare suppliers (hospitals/physicians) in a collaborative discussion around supply chain management, quality, and patient safety, so the providers fully comprehend that the one ultimately paying the bill is monitoring their performance. I’ll look forward to sharing the results of this type of collaboration now underway in a major market. It’s time for employer-driven healthcare.


Tom Emerick and David Toomey are founders of Thera Advisors. Their focus is to help employers maximize their role as the purchaser of healthcare services in working with suppliers to impact their population’s health and to lower costs.

Employers’ Declaration of Independence From Traditional Health Insurance by Dave Chase

Forbes carried a good article by Dave Chase, a leader in trying to reform healthcare in the right way. Writes Chase, “Employer frustration over the devastating collateral damage from a severely under-performing healthcare system is boiling over.” Click here to read the full article.

High health costs are driving US jobs to Mexico and other countries. GE and scores of other companies are exporting high value jobs. Some are even moving jobs to areas in the US where healthcare costs are less exorbitant. IBM is a good example of the latter. Yet Dave and others have demonstrated that rising health care costs can be controlled, and controlled in an employee-friendly way. What an irony.

Dave has created a Declaration of Independence From Traditional Health Insurance. The article lists a number of thought leaders, consultants, and employer leaders who have signed that declaration, the goal of which is to create a sustainable healthcare equation in America.  Signers include Al Lewis, Jim Millaway, Rajaie Batniji, Brian Klepper, Stan Schwartz, your humble author and others who have implemented effective health programs.

Of me he wrote, “Emerick’s Edison Health has made available the Centers of Excellence program for complex and expensive medical procedures to any self-insured company.” I’m flattered to be on Dave’s list.


Tom Emerick

Tom’s latest book, “An Illustrated Guide to Personal Health”, is now available on Amazon.

Cracking Health Costs…the book

Employees Benefit News has listed Cracking Health Costs, the book, as a must read book this year.  (Al Lewis and I were co-authors.) That’s not bad for a book that is three years old.

CHC just keeps on selling. Why? My guess is that as more and more companies are coming to the conclusion that their wellness vendor won’t solve  their health cost problems, they are turning to solutions that actually save money and get better health care for their employees…and save employees money. As one top HR officer once said, that’s a trifecta of goodness. CHC shows how to do that.

Thank you for reading this blog and thanks to those who bought the book.


Tom Emerick

Tom’s latest book, “An Illustrated Guide to Personal Health”, is now available on Amazon.

Is old time transparency kaput?

In this article by Tom Emerick and David Toomey, founders of Thera Advisors, we describe the challenges in “transparency”.


During the ‘90s, a new medical plan, called Consumer Directed Healthcare, was introduced to the market. These new plans were based on the premise that through a high deductible coupled with a funded account, employees would be incented to become better consumers of healthcare. To maximize the account dollars, employees have access to a transparency portal either through their carrier or a private vendor, and the tools would help individuals make a more informed healthcare decision. The belief – physicians and hospitals would be motivated to win patient volume by competing on price and quality, and healthcare costs would finally be reduced with the consumerism movement.

A recent article from Health Care Cost Institute (HCCI) reported that only 43% of healthcare expenses are for services that may have been shopped by a motivated employee.

For the 8% of the population consuming 80% of plan dollars, how motivated are they to shop for healthcare services if they are receiving 100% coverage once their deductible is satisfied?

For the remaining 92% of the population accounting for 20% of the spend, how much savings can be attained for the 43% of their “shoppable” healthcare services? Let’s see…43% of 20% is 8.6% shoppable services. That’s not much and many shoppable healthcare services don’t cost much anyway.

If the majority of a covered population accesses healthcare on an occasional basis, do we really expect them to remember the various portals and 800#s available to them, so they pause and think about the cost and quality of the recommended provider for the prescribed service? How does infrequent healthcare use correlate to the effectiveness of the transparency portals?

One of the private transparency portals recently released their 4th 2015 quarter results, and for the quarter, they experienced a net decrease in user count (number of clients).

So how do we solve the healthcare challenge since most individuals are not regular healthcare users? And how do we address the 80% of the spend? What role can a primary care physician play to educate the patient on the cost and quality of providers and to impact the “8%-ers”? Similar to most other industries, the purchaser (the employer) has the opportunity to work more closely with the supplier (the providers) to drive the removal of the non-value added waste and of the cost inefficiencies. The silver bullet to solving the healthcare challenges – the employers! There are employers taking this logical next step to address their challenges. Are you ready for meaningful solutions?


Tom Emerick and David Toomey are founders of Thera Advisors. Their focus is to help employers maximize their role as the purchaser of healthcare services in working with suppliers to impact their population’s health and to lower costs.

ACA: where we are today?

In this article by Tom Emerick and David Toomey, founders of Thera Advisors, we describe the net effect of ACA.


The healthcare industry is changing – same old headline. You have read of all the buzz regarding ACOs, PCMH, ACA, and every other acronym. Since we’ve been in the industry, the “unsustainable” cost increases have been the talk every year, yet somehow we have not reached a tipping point. So what’s different now? How has ACA impacted the healthcare industry, and more specifically the insurance companies?

The drafters of ACA set up a perfect adverse selection scenario – come one, come all, with no questions asked. First objective met – 20 million individuals now have coverage.

Next objective – provide accurate pricing for these newly insured. Insurance companies have teams of individuals who assess risk, so they can establish an appropriate price for the insurance protection. We experience this “underwriting’ process with every type of insurance – home, life, auto. In fact, we see this process with every financial institution, like banks, mortgage companies, credit card companies, etc. If a financial institution is to serve (and an insurance company is a financial entity), it has to manage risks, e.g., loan money to people who can repay the loan. Without the ability to assess the risk of the 20 million individuals, should we be surprised that one national insurance carrier lost $475M in 2015, while another lost $657M on ACA-compliant plans? Now if you’re running a business and a specific line has losses, your choices are pretty clear – either clean it up or get out.

Risk selection is complex. When you add this complexity to the dynamics of network contracting tied to membership scale, there is a reason numerous companies have made the decision to get out of health insurance. In 1975, there were over 2,000 companies selling true health insurance plans, and now there are far fewer selling true health insurance to the commercial population. Among the ones that got out were some big names – MetLife, Prudential, Travellers, NYLife, Equitable, Mutual of Omaha, etc. And now we’re about to be down to a few national carriers, which is trending consistently with other industries – airline, telecommunications, banking, etc.

Let’s play this one out for the 20M newly covered individuals. The insurance companies have significant losses on ACA-compliant plans. Their next step – assess the enrolled risk, and determine if they can cover the expected costs. For those carriers that decide to continue offering ACA-compliant plans, they will adjust the premiums accordingly. While the first year enrollees are lulled into the relief of coverage, they then get hit with either a large increase or a notice to find another carrier. In some markets, the newly insured may be down to only one carrier option. The reason most individuals do not opt for medical coverage is that they can’t afford it. If premiums increase 15% or more, how many of the 20M have to drop coverage because premiums are too expensive? Do we start the uninsured cycle all over again?

Net net, ACA has enabled more people to have health insurance, but at prices that are even less sustainable than before. ACA offers a web of subsidies to low income people, which simply means each of us, including businesses, will be paying for part or all of their premium through taxes. As companies compete globally, this additional tax burden will impact the cost of services being sold. As our individual taxes increases, we reduce our spending. While ACA has the right intention of expanded coverage, the unintended consequences of the additional cost burden on businesses and individuals will have an impact on job growth.

While it’s hard for anyone to dispute the benefits of insurance for everyone, we first need to address the drivers behind the high cost of health care, so we can get the health insurance prices more affordable. Unfortunately, ACA steered us further in the wrong direction. Self-insured employers are the key to lead the way in true reform of the cost and quality of healthcare.


Tom Emerick and David Toomey are founders of Thera Advisors. Their focus is to help employers maximize their role as the purchaser of healthcare services in working with suppliers to impact their population’s health and to lower costs.