This blog post is based on an interview with Cory Schmidt, CTO of AgencyBloc. It has been posted with his approval and permission.
Note: AB denotes AgencyBloc and CS denotes Cory Schmidt
Continuing with our Expert Series, I had the opportunity to speak with our Co-Founder, Cory Schmidt, CTO of AgencyBloc, about how he researched level funded plans for AgencyBloc and what other employers should be aware of in this new territory. Thank you, Cory, for your time and contribution!
AB: How did you first learn about level funded plans?
CS: I had heard of the concept for some time, but I didn’t understand that it was accessible to anyone but large companies. I was chatting with Dan Meylan at Allied National and realized it was a viable option for our company to consider.
AB: After learning more, what were some of the things you liked and what were some of the things you were concerned or confused about?
CS: I’ve always been frustrated by the lack of transparency with regard to traditional insurance carriers. They seem to force you into their model in order to access providers, and provide little insight into the cost structure and annual cost increases. Additionally, there doesn’t seem to be any incentive or support system to encourage smart utilization of services. I was very interested in the transparency that Allied was committed to, and our ability to control the cost curve - even potentially getting some of our claim fund returned if we didn’t use it - 100% of the remainder.
With all that said, we also went with a reference-based pricing model, which is definitely new territory and not widely known in our area. I was concerned that employees may run into friction when trying to get the services they need. That hasn’t been the case so far, which is great.
AB: How long from the point when you first started learning about this new coverage structure to when you decided to explore the option for your companies? Why did it go so quick/take so long?
CS: We really started to dig into this idea in early 2017. We were on a grandmothered ACA plan and had grown significantly. As a result, we knew we had an upcoming renewal that would be a significant increase and we needed to consider other/all options. We made the decision by Fall 2017 and it took a couple of months to get everything submitted and enrolled into the new plan.
AB: How did you prepare to manage change with employees, and were your preparations appropriate? Did anything come up you hadn’t expected?
CS: Given the nature of the change, we knew that employee education would be key. Fortunately, Marcie Strouse at KHI and Dan Meylan at Allied were instrumental in organizing education materials and a webinar that demonstrated all the changes to expect. We have a smart team, and they not only understood how it would work - they were excited to try something different when they saw how it impacts the financial aspect for both the company and them individually.
AB: Obviously bottom line savings is a key component of this choice to shift, but what other reasons did you and your partners decide this was an important move to make?
CS: Healthcare is a runaway train. We felt that we had to do something to change the game. We can’t increase our prices to customers by 15-20% every year, so we wanted to try something more sustainable. Companies need to push into areas that might feel uncomfortable or different in order to find a model that works.
AB: There’s a progressive movement in the healthcare world to change the status-quo from the inside, via independent benefits professionals, direct care providers and motivated employers. How do you feel about this idea that the Health Rosetta presents, that it’s CEOs who actually hold the key to save healthcare in this country?
CS: I love that people are trying to disrupt this industry. It’s been broken for far too long and something has to change. There are now estimates that millennials will contribute up to half of the income they earn to the health care system, directly or indirectly. It’s going to take a partnership among the employers, benefits professionals, and providers in order to figure out how to make it all work effectively, while controlling the cost curve. And given the budget required to provide solid healthcare benefits, CEO’s need to be pushing and asking questions to get the conversation started.
AB: What advice do you have for other entrepreneurs/leaders in regards to considering this new option for healthcare benefits?
CS: I would absolutely recommend considering this option if you’re eligible and comfortable pushing the status quo. Level funding is fairly straightforward and is a seamless transition. But I would also recommend considering the reference-based pricing model as well - it pairs well and is how true cost-savings can be realized and controlled in the long run. In my opinion, Networks aren’t everything they are promoted to be, and just because you’re getting a discount doesn’t mean that the original price, or MSRP, is fair.
AB: What do you like most about your career in the insurance industry?
CS: I’ve always been attracted to technology, in general. Since the insurance industry moves slowly in general, applying technology in this vertical has been an exciting challenge. We’ve had the opportunity to see how tech can really impact the brokers, and it’s become a necessity given the fast pace of change the industry has recently been exposed to.
Expert Series: Understanding a Brave New World in Healthcare with David Contorno
Read our Expert Series blog interview with David Contorno, Employee Healthcare Strategist and Health Rosetta Founding Advisor, about the movement happening today to turn the traditional healthcare coverage model on its head, and what that means for the business owner/employee/broker/agency relationship.