How Employers Can Get Better Healthcare for Less: Breaking the Status Quo with Dan Cosgrove

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Speaker A: Employers today are navigating an incredibly complex space. They are looking for ways to stretch their dollar further than ever. Healthcare premiums continue to rise at an unsustainable rate. HR professionals and CFOs and brokers are having really hard renewal conversations. It feels like every single week across the United States with premiums increasing and it seems like employees are constantly getting less care and their employers are spending more for it. Today I have the pleasure of interviewing Dan Cosgrove from Better Benefits usa. And in this episode you are going to hear some, um, tangible strategies about how employers across the country that are both fully insured and self insured are able to get more benefits for less dollars. And I know that might sound counterintuitive or controversial, but I promise you, if you give this episode a listen, Dan is going to talk about some incredibly tangible ways that might apply to you or your groups today. So I hope you tune in. My name is Dr. Andrew White and I'm the founder and CEO of AlignWell. We are a national MSK metabolic risk management company working with self funded employers across the country. You are listening to the Healthy Business Matters podcast. The podcast for brokers, CFOs, HR leaders and operators who are tired of buying healthcare programs and simply do not move the risk and are not helping their people. On this show we break down how incentives, pathways and real world execution actually shape employer healthcare costs. And we give you frameworks you can use at, uh, your next renewal meetings. If you care about reducing risk instead of managing optics, you are in the right place. So let's get into it. All right, man, so I'm excited for this conversation today. I uh, got Dan Cosgrove with me with Better Benefits usa. First of all, I would love to hear your story because you started not in the benefits world and now you're running a nonprofit in the benefits space. So I'd love just to hear a bit of your background to get gives, give us all some context on how you went from Nike to here.

Speaker B: Yeah, honestly it is kind of strange, but I'd say it's weird how life goes. So my, my first job out of college was working for Procter and Gamble. And um, I was working on like new business models and various ways to save the company money. And one, one of the programs actually ended up sending me down to Brazil. I was negotiating with South American governments for incentive money based on our planned expansion. But another new business model that we were kind of working on was this thing called salary sacrifice. So when we had started looking at being, you know, P and G, a massive global company, one of the ones we actually had looked at was how essentially we could give employees better benefits. Back then, this was like 15, 20 years ago now. Better benefits while reducing of course the company's taxable expenses. Because P and G has all the money in the world to get some really strong tax advisors for really strong tax advice.

Speaker A: Yes.

Speaker B: And so like I didn't think anything of that as like a 23 year old or whatever I was then. But then, you know, fast forward through all these years. I ended up uh, PG sold my brand. Cause they move you around all the time time they sold my brand Duracell to Berkshire Hathaway. So I went over and set up the new company over there and spent a few, there's a few years there working in marketing and sales. And then I got a call out of the blue from some people over at Nike and they poached me to be uh, the chief of staff to the CMO on the Converse brand. And I, I went over there and had a great time with it. Uh, but uh, I, I was there during COVID and uh, you know, a lot of people, you had the great resignation for a lot of executives during COVID And that was kind of like my, my mom. Because you know, when you're, when you're doing brand strategy, you're really studying like the minds of consumers. And the minds of consumers, especially during COVID was anxiety and depression were at all time highs.

Speaker A: Yep.

Speaker B: People were searching for a sense of being oneself like full stop. And so a lot of the campaigns that we came out with were that element of, you know, lead with the heart, then with the head, you win a hundred times out of a hundred times. And if you saw any of the Nike or Converse commercials during that time, it was the element of be you, be yourself. And it worked. Uh, Nike's sales were at record highs. Our stock was at record highs. Everything's great. Did feel really disingenuous for me though, because, you know, when you buy shoes, you feel good for one day, the next day you're back down in the dumps. So the first thing I actually did in healthcare was not Better Benefits. It was, I started a different nonprofit called Mental Health Matters. And that proved to be the testing ground to launching Better Benefits. Because I wanted to first help in the mental health space while still also recognizing that my limitation is I do not have the capability. My wife will be the first one to tell you this. I don't have the capability to sit in a room and listen to somebody talk to me about their feelings for 60 Minutes. It's not my skill set. But I can do business pretty much any day. And we know a lot of therapists out there, they don't want to touch anything business or financial oriented. They just want to help people. So it created the perfect match where, like, I started this company, I focus on generating the patients for the providers and I deal with the fun things of dealing with insurance companies and taking care of my providers to make sure they're paid very well and aren't living paycheck to paycheck. Um, and I just tell them, focus on seeing people. And so like, that started right after Covid, essentially. And that was my second kind of like, great awakening or enlightening moment, because at that point in time I was just told the same thing that every other, you know, small to medium sized business has ever been told is like, oh, if you, if you want to get good employees, you have to offer really strong benefits, which means you got to offer group health insurance and all these things and like the 401ks, yada, yada, yada. And I just like, all right, I did it. And the first year I did it and I looked at it, it's like, this isn't going to be sustainable. And like, I wanted to make sure my business could sustainably be funded and stay open forever and continue to pay my people and help their families. And so I then, you know, I've got a financial background, so I went into the, the P and L and I just looked at it. It's like, all right, what are the most expensive line items for most businesses Salary and wages. Good. Well there's no way you're going to tell talents I'm going to pay you less, but keep working for me. Yeah, but what's the second biggest one?

Speaker A: Benefits.

Speaker B: Yep. So I went down a rabbit hole and, and I'm a, I'm a son of two lawyers, so I guess you could say I like to challenge the status quo on a lot of things. Um, and so I ultimately started challenging the status quo and really started reading the IRS and the various tax codes like IRC tax codes. And I found that honestly a lot of companies have been not lied to but definitely misinformed as to what they could be doing for their companies and their employees. And so I ultimately started doing this on my own people and was like, wow, we have it. So since that time now three or four years later, we've just been sharing that same knowledge to other small to medium sized companies so that they can actually truly get the same benefits that my own people get. So hopefully that's kind of the quick background.

Speaker A: Yeah, yeah, that's, that is helpful. It's a cool story. I think. You know I'm, I came from the provider side so before I started working directly with employers and brokers and TPAs and carriers, I came from the B2C running brick and mortar working with, with patients. And so I think I've met uh, some very interesting folks who like you and I, uh, ended up in a world that we never maybe set out to uh, land in. But uh, it's a, it's a very niche and deep topics I guess I'd love to dive deep into. The title of this episode is around how employers can get more uh, health care essentially for less dollars or how can you with it that second biggest line item in your budget, uh, get more value, maybe even at ah, worst for the same dollars. So you had mentioned getting into the tax code. I'm assuming that part of what you do @Veteran Benefits USA is a lot of tax strategy or maybe some creative things. So I'd love to hear just practically like how is that, how is that possible? Because I think maybe if I'm a CFO listening, especially if I've got some scars of uh, like in, I live in Michigan and you know we, we have our network nationally but in Michigan it's been kind of a bloodbath where in the last five years the average renewal with group health has been 20% year over year. And so if I'm a CFO listening I might have some scars of like that sounds nice to be able to lower my cost by offering more or get more for the same budget. But last five years, uh, my budget's gone, uh, up 20% compounding. So help me understand like practically what that could be and how that could be possible.

Speaker B: Yeah. And, and as we think about if, if you're the cfo, the first question is, are you self insured or fully insured? Which one would you be in this just a scenario? Because this could dictate then the answer that we provide.

Speaker A: Yeah, yeah, that's fair. I would say the majority of our audience is self funded, but I think it might be useful to maybe we can start on the self funded side and then also about fully insured. Because that is a very fair caveat.

Speaker B: Uh, yeah, yeah. Okay. Um, so yeah, let's start first on self insured then. Which means what? They probably have at least 100, 150 employees or so, so that they have the managed risk, but they're not like the P and G size where like self insured, like you're really not taking any risk based on your scale. Uh, so they have to be really conscientious on that.

Speaker A: Mhm.

Speaker B: And yeah. So for self insured, when you think about, there's a lot of expenses that pop up that are completely unnecessary. Like, we know Covid was terrible, right. But if there was a positive that came out of COVID is that telehealth started blowing up. Mhm. And we found, I think what 80% of medical needs now could be done from the comfort of our own home. So don't get me wrong, like, my wife and I just had our second kid four months ago. None of that stuff was solved virtually. Like you still physically need to go into doctors for major medical situations. But you know, you and I both have kids. Like our kids are probably always bringing home a new sickness from school. And instead of having to, you know, drive 20 minutes, you know, sit in traffic and just get frustrated and go sit in a doctor's office, get hit with the CO pay and then head down to the pharmacy to pick it up. Now you can do all that virtually and you can essentially do the Netflix model and bring it to the health care space where it's more value based care instead of fee based care. Because nobody here is winning with our current health care system, uh, as a fee based system. The insurance companies will be the first ones to tell you that too. That's why their premiums keep going up.

Speaker A: Yep.

Speaker B: What we've really focused on as, uh, one of the layers and it's a multi layer strategy, but the lowest hanging fruit. And again people can Google and they're like, oh, you can't do this now. You can't do a non compliant program. But if you focus on preventative healthcare plans, that's a major unlock because we know the Affordable care Act in 2008 it meant to do well for our health care system. But when you really look at it now, of course, hindsight's 20 20, right. Nobody's cost of care went down. In fact, most people's premiums went several thousand percent up and we need to change that. So then in 2016, 2017, there was an amendment under the Affordable Care Act. Ah. That said, hey, we have a major issue here in America, preventative health care, like most people, because you know, premiums went up. So what did we do? We moved to higher deductible plans. But when you move to higher deductible plans, employers are less likely to actually go to the doctor because they have to pay all that out of pocket first. And so that little symptom that could have been treated when it's still a little symptom has now turned into a major medical situation which now turns into a chronic condition, which two thirds of Americans have chronic conditions, which costs Our American economy 4 1/2 trillion dollars a year. So something is wrong here.

Speaker A: Yep.

Speaker B: So what they did is they said, hey, we're going to start incentivizing employees and employers to actually focus on preventative health care because the government actually knows if you have a healthier workforce, you have a healthier economy. If you have a healthier workforce, you have a healthier taxpayer. Yes, that's how the government looks at it. And so yeah, these preventative care plans, they were approved in that 2016, 2017amendment. But if I'm going to be very honest, they were poorly rolled out. It's still a gray area. You have a lot of people doing it wrong. You have people that are telling employers like, oh yeah, that Gym members, that's a 2D qualified medical expense. You went to Whole Foods and you bought some healthy food. That's 213. It's like, no, it's not like that is definitely where the IRS gets angry about some of these preventative care plans are people are selling them incorrectly. Mhm. And so the first thing that we always do is we bring to a client, especially if they're self funded, the Netflix model of healthcare where we say we're going to Give your employees plus spouses and kids up the age of 26, free access to virtual healthcare. It's not going to solve everything, but if you can have 80% of your medical needs now done virtually at $0 co pays, meaning it doesn't bill insurance, you just reduce your claims utilization by a significant margin. And you most likely also reduce the likelihood of people needing to be absent from work for major medical conditions. Because now that little cough is treated when it's still a little cough and doesn't turn into pneumonia or something like that. So I'll pause there, see if you have any, some questions stemming from.

Speaker A: Yeah, so unpractical, but a criticism that I'll hear sometimes from employers that we're working with. And I've seen questions come up when it comes to virtual solutions is engagement, like how do we get our employees to adopt? So what have you seen be effective when you uh, bring that Netflix model in your words to an employer group, how would you, what have you seen be effective to get the employees to adopt, to utilize when they have that cough instead of, you know, ending up in an urgent care or otherwise maybe not engaging and then developing those chronic conditions like that cascade you were describing before.

Speaker B: First off is user experience and interface. Like the insurance companies themselves have come out with virtual health solutions, right. We were talking to a CEO of a very large logistics company. Um, and you would think they would get some special care, right? If they're the CEO and he was complaining about his son who's in a different state for college. Uh, their uh, telehealth sucks. And but it's almost like on purpose because in a very convoluted system, insurance companies, because of medical loss ratios actually need the cost of care to go up because they can only take x percent from a profitability perspective. So they actually need cost of care to go up. Cost of care is not going to go up if more people are using telehealth. So in a very, very screwed up way, they don't want our telehealth to actually be that good. So you actually have to work with a telehealth company that isn't like affiliated with the insurance companies because then they actually focus on the user experience and interface. And once people can get in there and they can uh, do the 60 second facial scans to get their biometrics, like that's really cool stuff. But they can also just as easily access a specialty pharmacy so that that GLP1 drug that is going to cost them a thousand dollars at Walgreens with their insurance they can get for a hundred dollars. So like you have to make the value worth it or else nobody's going to get on it. Because once you know, one employee that does it, they of course, and they have a good experience, they're going to tell other employees about it. And so like no, you don't get 100% of the people participating on day one now because you hope people aren't sick all on day one.

Speaker A: True.

Speaker B: But it's ultimately just you create a good user experience and that creates the waterfall effect of more employees using it and more employees using it and more employees using it. So that's kind of the strategy that we've been doing there.

Speaker A: Yeah, so we had talked about the uh, at least initially, the, you know, on the self insured side, you know, that kind of targeted approach, lowest hanging fruit on essentially claim reallocation and cost containment. But I'd be interested to hear you had already talked about, you know, that fork in the road. Are you fully insured or are you self insured? And so if I'm Now I'm a CFO or CEO, uh, of a 50 person employer group, I'm fully insured. I'm a bit too risky in a population blue gray collar. So the idea of going self funded sounds a bit like there's quite a bit of risk there.

Speaker B: Yeah.

Speaker A: So now what are, what, what would you typically do if I came to you on um, in Better Health usa? Like, you know, what does that look like?

Speaker B: Yeah. First off, we'd still lead with the preventative care. Right. Because even for fully insured, in theory, if you're reducing the claims utilization and technically speaking the insurance carrier shouldn't be jacking up your rates, that's technically speaking. We know they, you know, health insurance death spiral is very much going on right now after the subsidies went away or the cliff was put back in place. So there's a few avenues we would go down, especially if there are sub 50 or hovering right around there. You and I probably know this, but maybe some listeners don't know this. Group health insurance is actually the worst thing you can do if you are sub 50. And the reason being is when you look at it, the group health insurance marketplace is what funds the rest of the health insurance industry. Like look at Medicare and Medicaid rates and what they pay for a procedure at a hospital or an outpatient center. It is a fraction of what the group plans pay. Why are the group plans playing so much? Because again, they have to get the money somewhere to be able to offset the cost of Medicaid and Medicare. So the first Thing I would actually recommend is I would put all of my employees on individual marketplace plans because most groups have uh, a lot of employees that could actually still qualify for subsidies. Like if they're making less than $62,500 a year, they're still going to qualify for a subsidy. It's just the enhanced tax credits that went away for the people making $150,000. Maybe you don't need a subsidy at 150,000. So the first thing I would actually do is I'd help them move over. Like I'd help them buy their health insurance for less. So you can do that through ichras, you can do that through medical expense reimbursement plans. Like pick your cup of tea, it's the same. Found that person that is earning $50,000 instead of your group plan paying the equivalent. Let's just make it up a thousand bucks a month for that premium. Now you're paying like 500 bucks a month. You're paying 50% less. You're still actually getting just as good of a benefit or a premium type plan or co pays, et cetera. Um, so that would be like one of the first things I would do if they wanted to be very adventurous. Are you familiar with health shares? I am. Ah.

Speaker A: But again, I think it'd be great if you could.

Speaker B: Yeah, Health shares have taken out off like with the creation of the Affordable Care Act. What was our health insurance before the Affordable Care Act? Insurance, good or bad, could deny pre existing conditions. But as a result of doing that, the healthy people that were on the insurance plans were paying a reasonable premium by forcing insurance carriers to then cover unhealthy people. Well, insurance companies are insurance companies. It's insurable risk. How are they going to cover the risk? It's a risk transfer. They're just going to jack up the premiums on the healthy people. So the healthy people then started figuring it out. And I know it started more so in the churches where churches as a form of tithing would help out other members of the church if they're hurting. And a lot of people are just like, well it sounds interesting but I don't want to be a member of the church. So newer health shares have evolved where it's like the core value of be a good human. But when you look at some of those health shares out there, like I'll list a few, like impact health sharing is really strong. But uh, they're more so strong on like individuals. So if you're like a 1099 listening to it, great. Mighty well. I've been really impressed with them from a group perspective. Like I've seen some really strong offerings with them. But when you look at health shares, the thing that's the difference between a health share and health insurance is it's not health insurance. Meaning if you are an unhealthy person, like if you have cancer, I'm um, I'm sorry, you're not going to get on a health share. But we already know this. Like 50% of healthcare costs are from like 5% of employees. So if you have a 50 person company, that means really like 2 or 3 may not qualify for the health share. Seven, you can put on a health share where their premiums, I kid you not, I'm on one $650 a month for my family of four. For the equivalent it's of a $2,500 deductible, which is they call an unshareable amount. Same thing in the state of Massachusetts would have cost me $2,400. So I save $1,800 basically a month by doing it. So if you think about it as an employer, you can actually give your employees better access to healthcare. Because a health share, you present yourself as a cash payer, meaning there is no real network. You can stick with whatever doctor you want. And that, that to me is a major unlock. Those other three employees you still want to take care of, should want to take care of them. That's where you can still help them get an individual marketplace plan with health insurance. But they're overpay on the other 47 and give them essentially a worse benefit because you need to make the numbers work. So yeah, health shares are really interesting. I would say let's just pretend the company's 51 employees. Now you have tax penalty A, tax penalty B turns into a math equation. I have a great, uh, example that a fully insured group, 150 employees, uh, in New York. We know New York's an expensive place, but they had, they were paying, oh my gosh, it was close to, I want to say $1,800. I'm just going to round up $2,000 a month to cover their employees for a not really good health insurance plan. Most of their employees earn about 45. Uh, because they're a nonprofit, they're in about 45 to 50k. Their current broker was just like, oh no, you gotta, you gotta stay. You gotta keep offering this group plan. You gotta keep offering, you gotta keep offering it like, and they're doing the risk, the threat it's like if you don't offer it and your employees go get a subsidy from the marketplace, you're gonna get hit with a tax penalty. Mhm. And I was like, yeah, you're gonna get hit with a tax penalty. And here's why you want to do that. Because the tax penalty for tax penalty B is $5010. So I helped them create A where they make it unaffordable for the people earning 40 to $50,000 a year as a result of it, the employee, when they go to the marketplace, they can say, yeah, I can't afford it. It's not under that like 10% threshold. Essentially as a result of that, those employees now just got a $0 deductible $0 premium with a $2,000 maximum out of pocket, the employer is now going to pay a $5,010 penalty tax penalty B. And that's probably going to occur three years later. So it's basic math. If they are paying 2000amonth times 12 months, that's $24,000 minus $5010. It's basically 19,000 do as a result of paying a penalty. But people are so just brainwashed and it's just like, oh my gosh, the IRS is going to come after me. They're going to hit me with tax penalties. It's like yes, you're going to get hit with a tax penalty, but when you do the math and you take the emotion out of the IRS is going to come hit me, you just save $19,000. And like especially for me, like uh, now truthfully, when people reach out to me, if they ever want a donation to their nonprofit, I'm actually going to look at their benefit structure. Because if you think about that, if somebody is donating to this nonprofit, if you have 150 employees, times, you know, $19,000 a month that they could have been saving, if they would have turned that down, I would have been like why am I, why am I donating to you? You're just basically overpaying for insurance. You're just, you're paying bcbs. More like why? So there again, uh, there's so many interesting things you can do whether you're fully insured or self insured. You just have to be willing to consider different options. And things are going to sound scary because new has always felt scary. And we know also again, this industry is very broken. I remember a line from my former boss, Warren Buffett. He said, America's healthcare system is the tapeworm to American businesses. If that doesn't say something like, the industry is so misaligned. People shouldn't be making 5 to 10% commission on how much premiums are increasing. They shouldn't. They should get paid a percentage of the savings they generate, which is how our nonprofit actually operates. So I, I know I just went on a spiel there. So I'll, I'll, I'll pause.

Speaker A: No, that was good. That was good. I mean, I loved that you gave a couple practical, uh, examples of those kind of creative strategies, because I think that's the, you know, one of the struggles that I think I sometimes have when I'm talking to, uh, an individual employer group is that there's a burden to knowledge. And so then there are times where I've been in this space now for six years and the exposure I've had and the, uh, I spent all my days in this world. And so then there are things and strategies that sometimes I think of as completely common sense or like, yeah, of course you've probably thought of that, tried that, and then you don't think to bring it up. And then I'll meet a client sometimes that if I bring up an idea, it's easy for you, like, oh, this might be revelational knowledge to you. And because you're an HR person who's sitting on a unicycle juggling 12 plates and, you know, like, now it's your renewal cycle and then you're relying on your broker. And you and I both know that there are some amazing brokers and phenomenal. But then just like any profession, there's good and bad eggs. And also you had mentioned incentives. That was one of my favorite episodes I've ever done on this podcast was talking about the different incentive structures that live inside of the United States healthcare system and all the players at play.

Speaker B: Yeah.

Speaker A: And when it comes to the, uh, the incentives in the broker community, that's what's really interesting sometimes to think about is, you know, if I'm, I'm an employer and you're my broker, and you have a bonus coming from a Buka carrier for renewing at least X percent of your book on fully insured plans, then I am disincentivized. You're disincentivized as my broker to bring creative ideas you're describing to me. And again, and most employers don't even really know that. And that's just one example. So again, I really appreciated that you gave some tangible things because, uh, I think that's really valuable for listeners because to your point, it's Just there are so many layers or opportunities that again, if I'm an employer listening, very likely could have been revelational ideas to them.

Speaker B: Yeah. And to that point of like different layers because our healthcare system is confusing by design. Because the more confusing you make it, the more money you make as the insurance carrier.

Speaker A: Mhm.

Speaker B: Same thing. Like if you think about the 2008 banking collapse, like CDOs and all these, like they had any idea what the hell they were talking about, but they made it confusing. So people were just like, oh, makes sense.

Speaker A: Yes.

Speaker B: So like our goal is to try and really simplify it down, what I always try and do. Because like there are some things that are health insurance oriented, like buy your health insurance for less and then there's other things that you can stack on top of it. Supplemental benefits like the preventative care plans, group accident plans, et cetera, even like private pension plans, like. And so what I try to explain to people is especially in the health insurance spaces, I call it a sword, a uh, shield and a safety net. I call the preventative care plans like your sort, your everyday usage. If you have a cough, you open up the telehealth app, you talk to a doctor. Now you still need your shield because life can happen and that's going to be your major medical insurance. And again, you hope you don't have to use it, but you still want to avoid the catastrophic losses. So if that's the case for catastrophic, then you try to go to the high deductible plans. You don't need to have the gold planned anymore and overpay on your premium. And then to minimize, since you're on a high deductible plan, let's just make it up, it's $2,500 deductible. To minimize that exposure, you put in an accident plan. Because just like Aflac heavily advertised with, you know, Deion Sanders and Nick Saban covering the out of pocket medical expenses that health insurance doesn't, the group accident market is taking off because there's higher deductible plans going into place. So if you put that just stacked together, you give people free access to virtual healthcare to solve 80% of their medical needs. Life happens. Okay, now they have their health insurance, but most likely a lot of that health insurance, those out of pocket medical expenses they did have to pay is now going to fall under an accident plan and that's your safety net. So there's a way you can essentially reduce even that deductible amount that they have to hit by Just being smart on the layers you put in. Again, it's hard to digest and it sounds crazy because show me any person that's approached an employer that owns that account today that's going to try and find them ways to reduce their cost. It. It is not in their financial best interest, which is super frustrating. And I just feel bad for those, those employers and more importantly the employees because a lot of people are living paycheck to paycheck and that's just when you have that much money going towards healthcare expenses or healthcare premiums. It's just, it's not right in my feeling.

Speaker A: Yeah. So I want to, there's a question I want to end with but before we get there, are you, if I'm an employer listening as far as how you engage in the marketplace with better benefits USA is it you're usually just engaging directly with an employer. If I'm a broker listening, do you engage your brokers? Like what is the uh, how does your practically your business work when you're coming in? It's my understanding you. I believe your fee structure is. Creates that aligned incentive. So again, exactly. If you could maybe explain that that'd be helpful. I think.

Speaker B: 100%. Yeah. Great question. The short answer is we work with both employers and brokers. Oftentimes m. Some of my best referral partners are the brokers and they're coming in there because it'. Funny. Brokers love us when they're trying to win new business and they don't like us when they're trying to keep the existing client. So brokers always like bringing the new ideas to potential clients that they're trying to catch. I mean I can tell you, uh, one of the brokers that found out about me in November of last year, he's already gotten seven new clients this year. So like it's is a unique proposition and a lot of employers are looking for unique propositions. And then yeah, I've got plenty of connections just myself from, from my background of P and G, Berkshire, Nike that there's plenty of employers myself that I can just directly call on. But yeah, if it's. If you're a broke out there, I'm not here to compete with you. I will give you the playbook of what you can use. But again the core agreement is we're going to be paid based on the savings we generate. We don't want to be in that misaligned incentive model.

Speaker A: Got it. So then the last question I wanted to uh, end with was you're like we had talked about you had a diverse background and you came into the space. When did you start Better Benefits usa?

Speaker B: About four years ago now.

Speaker A: Okay, so then you've been in this space for you know, four, four and a half years. Where do you see the puck going? Like where do you think that uh, you know, you and I think both see the world similarly and agree that things are not sustainable, literally breaking down in front of our eyes. The uh, the thing that's exciting to me is that the biggest payers into the healthcare system that fund everything are employers. They pay the bulk of the premiums that fund the system and then the, the bulk of bulk, the taxes that then fund Medicare and Medicaid. Early in my career I did lobbying in D.C. thinking the best way to reform healthcare was gonna be at the legislative level, which I joke was kind of like taking a nerf gun to a nuclear arms race. And it just wasn't gonna happen. And so the reason why I'm in this space now is because I believe that reform will come from the biggest payers which are innovation, uh, is happening because the employers are changing their behaviors and, and it's because they have to, they cannot afford to just the status quo anymore. So again I'm curious from your perspective, where do you see the puck going? If I'm an employer broker listening, like are there things that I should be thinking about, looking out for? You had mentioned a lot of tax incentives. I don't know if you foresee that changing anytime soon with like, if you've heard of anything. I'd just be curious to get your take on that question.

Speaker B: Yeah, so I'll start with the simple answer and then I'll give you my hot take after that. So, simple answer. We're moving to value based care. Simple as that. I mean as somebody that also still owns a mental health company, I have a number of conversations with the Bucas and they're all pushing for value based care. So I think with their enforcement there's going to be more emphasis on value based care. That's kind of like the simplest one out there.

Speaker A: Can you define that a little bit deeper for those listening? Because that phrase can mean a lot of things to different people.

Speaker B: Yeah, yeah. Basically think of uh, like one medical when they were acquired by Amazon, so another big company kind of entering the space. It's a subscription basis. So instead of you paying, let's just make it up 150 bucks a month or 150 bucks per session for a mental health session now, uh, and doing it, you know, Every single week, maybe they tell the medical provider, we will give you 300 bucks a month to treat this patient. You determine how frequently you're going to do it. Yep. So that's really what value based care is going to be. Uh, because yeah, in, in our very again, fee based system, the revenue stream is keeping people sick. That's not good. So the simplest answer is value based care. Now here's going to be my hot take one. Um, and this is where you're going to get so many people that say, no, you can't do this. The preventative care plans I was talking about, they're group accident plans and they're done on pre tax basis. And essentially like again, if you're doing in a compliant fashion, so long as you have qualified medical expenses tied to it, et cetera, et cetera, you can essentially increase the net pay of the employees and increase the savings for the employers because it's a pre tax deduction. So you're reducing your FICA obligations. Well, if people have been following that industry, there's been IRS memos 16, 17, 23, there's been a TRI agency agreement in 24. And like you could ask a hundred erisa attorneys and 50 would say, yep, you can do it. And 50 say, no way in hell can you do this. And where I think this is going to is we are going to standardization. And I will explain that because let's look at the two bigger things that have occurred in the last 40 years in terms of employee benefits. There's this, uh, thing that went on in 1978. We were having stagflation. And you know, that's when Reagan was only doing two movies a year because the tax bracket was like 90%. So he was just like, if I did a third movie, I was just giving it all to Uncle Sam. So then, you know, some people got together and they created this thing called the 401k as a way for rich people to put a lot of money away pre tax. And like to give you an idea, like it was built for rich people. It's like $50,000 a year. You could do back in 19, like 79 for it. Like that's the equivalent of $250,000 today. So it was definitely not designed for the everyday employee. But then Ted Brenna came along and he created the 401k for employers to use because pensions were starting to kind of get wonky. And so like that was 1980 and for like six years the Irish was like, no way in hell should employees be allowed to, you know, move money out, pre tax, yada, yada, like we're going to reverse course, employers are going to get in trouble for doing this. And then in 1986 the funny thing happened, it got codified into law. Why? So like basically from 1978-86 the IRS said you can't do these things, they're illegal, it's a scam, you can't do it. But then it got too big to fail essentially because now you have all these middle income Americans, the ones living paycheck to paycheck, that are using a 401k to invest in their retirement and reduce their tax liabilities. And you're going to tell me that it's in any politicians, whether Republican or Democrat, their best interest to come out and say yeah, all those things that you were doing on a pre tax basis, we're going to hit you with tax penalties and interest like no. Oh like that would create a default or a bankruptcy for a number of Americans. And that's not good for any economy. So like that was the first evolution of employee benefits long before probably you and I were born. But then you had this other thing like 20 years later that emerged. It started in like 2003 ish and it was called a loophole. It had triple tax savings advantages and all the big carriers were just like, stay the hell away from these. And then 2008 happened and you had the financial crisis and then you had insurance premiums climbing up because of the ACA and people started moving into a high deductible plan. And with that really came about the HSA. Well, the HSA started in 2003, but people were being warned, this thing is a tax scam, you cannot do it, no way. And these big guys then reversed their opinion basically in like 2013. So it only took them a decade in which they said the 401K or uh, the HSA is the 401K on steroids. So again, it took about 10 years for now everybody's using the, the HSA. It's market standardization. So like these preventative care plans, again, if you're doing them right and you're not trying to be just like a con artist, if you're doing them right, they're going to move to standardization. I hope the bad actors get shut down because that's what makes it so hard to actually bring the preventative care plans with that safety net of a group accident policy to individual employees. Because it sounds almost too good to be true because there are a lot of people that are doing it incorrectly. But when you think about it, it was started in 2016. There's been memos in the gray area. Then you had this TR agency agreement in April 3rd of 2024 and in that opportunity of the TRI agency agreement with the Department of Labor, Health and Human Services and the irs, they had the ability to say all supplemental benefits done on a pre tax basis must automatically any claim payment made be taxable income. That was the nuclear option. Well, guess what? They backed away from that. And why did they do that? Well, first off, look who lines their pockets the insurance in the world. You mentioned lobbyists. They spend about $250 million a year paying politicians. So that's also not in their best interest to piss off groups like Aflac, Allstate, et cetera. So if they had this opportunity to hit the nuclear option and they didn't, then it really suggests to me that they're moving to a world of standardization. Because if in theory you can do these plans properly, and again you have to do them properly, and there's probably only 10% of groups that actually know how to do it properly. But if you can do it properly, if you're going to tell me that it's not going to benefit America and it's not going to benefit employers and the individual employees to give them free access to virtual healthcare for their entire family, free access to like 94% of all drugs in America at $0 co pays with then significant reduction on like the specialty drugs like the GLP1s to like 70% of the cost, a safety net, like an accident plan for those unforeseen events in life so that they aren't ultimately filing for personal bankruptcy when they have a major medical expense that they can't afford. Like if you're going to tell me that that that should be pulled away, that just doesn't make any logical sense because ultimately if you take better care of people, again, it's going to be a healthier economy for all of us. So that's my hot take because again, you can ask 50 ERISA attorneys out there and they're going to tell you no way in hell will this ever be allowed. I do not think that I think they will be allowed so long as you're doing it the right way. Yeah.

Speaker A: Ah, well, Dan, I really appreciate your time. I appreciate just the knowledge and passion that you, you know, you're bringing to the space. You're clearly a very, uh, smart guy that could have, you were successful in a lot of things prior and so as someone that is very passionate about this space and thinks there needs to be more smart, passionate people trying to fix it, I appreciate, uh, like what you're doing. Before we go, how can people find out more about you and your company?

Speaker B: Yeah, uh, certainly I'm very active on LinkedIn. I'm always posting about the, uh, our broken healthcare industry, so they can always engage with me. Their name's Dan Cosgrove. I think the parentheses around is healthcare disruptive. But they, uh, can also find us@betterbenefitsusauh.org and if they actually wanted to just do a free audit for themselves, we also have a sister website called findbetterbenefits.org where it's like a 15 question quiz and a company themselves could actually just figure out like, oh, how much, what situation are we in right now? But yeah, as a part of our nonprofit, like, yeah, we, we offer free audits to employers just to kind of help them understand, like you don't know you have a problem until you assess it. So, yeah, if they, if they want any help, they can visit us at either this website, so betterbenefitsusa.org, or findbetterbenefits uh.org or they can just email our general team at infoetterbenefitsusa and uh, one of us will get in touch with you and have a conversation and kind of take it from there.

Speaker A: Awesome. Well, Dan, I really appreciate your time and thank you for listening to the healthy Business matters podcast, the podcast for HR leader, CFO folks, brokers, and, uh, wanting to figure out how to solve the healthcare employer benefits world. We release episodes every other week on Tuesdays. We hope to see you next week. And please like and subscribe wherever you get your podcasts. Thank you so much. All new drinks are now at McDonald's with refreshers like the Strawberry Watermelon refresher and the Mango pineapple refresher with popping Boba to crafted sodas like the Sprite Berry Blast with berry flavors and cold foam. Who knew ice cold drinks could be so fire

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