Cleared Hot - Powered By BRCC - Episode 391 - Chris Hamilton

Episode Date: June 16, 2025

Chris Hamilton is a finance expert with 15 years of experience, on a mission to expose how the healthcare system is stealing from the middle class. Chris uncovered a harsh reality: insurance brokers and companies have zero incentive to lower your costs. Brokers even make commissions on rising premiums, sometimes earning bonuses for keeping prices high. The Affordable Care Act, rather than boosting competition, turned healthcare into big business. What was once a market of 12-13 insurance companies has now consolidated to just 4 major players, dominating the industry. With fewer choices and rising costs, the average family is paying $24k in premiums annually, plus another $5-6k out of pocket—all while the healthcare giants profit. That money, which should be building the American dream—going toward college savings, a home, or retirement—is being swallowed by a broken healthcare system. For the middle class, these rising costs are an invisible thief, robbing families of financial security. Hotchkiss Insurance: https://hotchkissinsurance.com/ Today's Sponsors: Black Rifle Coffee: https://blackriflecoffee.com Truewerk: Check out the full lineup and get 15 percent off your first order at https://TRUEWERK.com/clearedhot.  

Well, hello there and welcome back. A question for the audience. How many of you, I'm going to assume that most of you have heard of the term big pharma. You've heard of the term health care. You've heard of the term insurance, right? These are almost, if you were a phrase that and a question, that would be rhetorical for sure. How many of you actually understand what goes on behind the scenes? Where are the money is trading hands? Now, for myself, I'm a fan of documentaries that talk about things like this, exposing health care, not for the great things that it does, for the fucked up things that it does. And it does both for clarity. Big pharma, immense help and has changed probably the landscape of humanity going forward. Not always altruistic motivations behind. I don't know if people have come to this realization yet, but money is a huge motivator in that end. industry. Health insurance specifically. Today's conversation was with a man named Chris Hamilton. Fifteen years of experience in finance and got a bug to dive into the health care system,

specifically the insurance space. And what he uncovered was pretty shocking to me, just from a numbers perspective. And also this almost hidden ecosystem, I'm going to say hidden in plain sight, though. What's going on is not by any stretch cloaked in being unknown and uncertainty. This seems like it's almost consumer facing and it's just tolerated of how organizations charge, why they charge the middlemen, how they can create this self-licking ice cream cone of profits. Guess who's paying for all this? That's right. We are. It's a fascinating conversation, just about the health care system writ large. I hope it was, or I hope it is, eye opening for you. It got me thinking quite a bit, and there's a lot of things that businesses that are dealing with ensuring employees, I think can take from this conversation.

So that's the episode for the day, episode 391 with Chris Hamilton. As always, before you know that, give me two minutes. Let me pay the bills. Today's episode is brought to you by Black Rifle Coffee. Let's head over their website, right, meow. Bing! What do we see? Well, it is actually the day I'm recording this, which is Saturday, two days before it comes out.

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To the smoke, I'm looking at danger close now. But looking at that bill, it's like, holy shit. Yeah. And then I ended up paying 500 bucks. Tricare covered it. But I've also heard these stories of people who are on the edge of bankruptcy and they'll say it's a $100,000 bill. I got $30,000 cash in the hospital's like, that's good.

Like, how the fuck can you do that? Because if it costs $30 grand, why aren't we charging $30,000? Yeah. You know what I mean? Well, you know, there's a lot to unpack there. But I think at the end of the day, the hospitals, you know, they want to make what they can. For sure. And so they're going to bill the insurance company.

And they usually set up, depending on how they've contracted, there's usually a discount off of whatever the billed charges are. Yeah. And if something's not covered, they look at it and say, well, what can I collect from somebody? So something is better than nothing. Even that what you just described is so galactically fucked up. Yeah. You know, it is.

It is. Well, it's confusing. I mean, what other part of our life did we walk in? somewhere and we're going to buy something and we don't know what it's going to cost. When I walked into your coffee shop, everything's listed on a menu board. I know what I'm going to buy. I know what I'm going to get. I know how I'm going to pay for it.

And we've agreed on that ahead of time. And it should be ballparked to most coffee shops probably at least nationally and maybe globally, depending on where you're at. Right. Well, if I want to get a cheap cup of coffee, I can walk into a gas station and get something for $1.50, but I know what I'm going to get. Yeah. But if I want to get a really good cup of coffee and I know that it's high quality, I'm willing

to spend more for that. Right. And people don't understand when they're walking into a hospital at any given moment. Is this a really high quality hospital? And I'm going to pay a little bit more for that, which in the reality, if you look at the data, the highest quality hospitals generally aren't the highest cost. It's crazy. If you were to chart out cost and quality, you would think just like everything else, if I pay Ferrari price, I'm going to get Ferrari handmade quality. Right. but in the reality in the healthcare world is oftentimes the facilities and the surgeons that are the best are typically going to be kind of in that mid range of the pricing for quality and they're going to be the highest quality because think about this the guy the the guy that does the orthopedic surgery is the orthopedic surgeon who's going to do a hip replacement the guy that can do him in his sleep because he's doing so many every single day every single month yeah he's got volume and he can slide patients in and and he's typically going to be the highest quality because he's got the most expertise and he's not going to be the highest price.

That's the data that we see, which is wild. That is interesting. I was going to use a car analogy too. You would think that as the cost increases, the quality should as well, which actually isn't even necessarily true in the car world, but that's the story that we tell ourselves. Yeah, 100%.

So, yeah, there's just so many inefficiencies, lack of transparency. People don't understand. It's overly complicated. and the average person doesn't understand how insurance works. And before I got into this business, I mean, I've got a finance degree. I studied finance and economics in college. I have an MBA, and I was working in corporate finance.

And whenever my company would go through open enrollment, I would get this booklet, 30-page booklet. And I would call people in the industry that I knew, friends of mine that I went to school with that did health insurance for a living. I was like, hey, help me understand. What does any of this mean? What plan do I pick? and I would like to think I'm smarter than the average bear,

and I had a hard time understanding it. And so getting into this business a little over a decade ago, I came into it with that mindset that this is too complicated. We've got to figure out a way to make it simpler. Yeah. Paint for me, as broad brushes as you want, as precise as you want, the overall ecosystem just of health care in the United States.

Like, where are we right now? And then if you could rewind it as far back as you can, I would love to understand the evolution of how we got to where we are. right now as well. Okay. So there's two big components that you have to really understand. There's healthcare and there's health insurance. There are two separate systems. We think of them as one. And so whenever somebody goes in to get health care, they're typically using health insurance. But there's other ways. You just mentioned a scenario where somebody could go in and pay cash for something. People use credit cards. There's payment plans you can set up. But health insurance

is the predominant way that we pay for health care, and that's why people think they're one and the same, but they're actually two separate systems. So health insurance actually started in my hometown in the 40s. One of the big hospital systems offered what they called a hospitalization plan. You can pay a subscription fee. It was really for teachers. And they, you paid a fee,

and you had access to that one particular hospital. And then California saw how that worked, and they start different cities and hospital systems joined together. And that was actually the start of Blue Cross Blue Shield. Interesting. And that kind of evolved. Actually, let me back up a little bit further. We have a predominantly employer-based health insurance system in the United States.

Most people have a job, and they get their health insurance to their employer. In fact, I was looking at some recent data before I came on. It's about 54% of Americans that are insured get their health insurance. from their employer. From their employer. And then Medicare and Medicaid are the other two big. I don't know why, but I would have guessed that that number was smaller. I think my guess would have been in the 30s.

I don't know I don't have any data to support that. That just would have been my shotgun guess. Yeah. The data that I saw was from Kaiser Family Foundation, which is a big think tank. They do a lot of research on health insurance. Oh, trust me. The fact that I'm wrong is just proof I'm an idiot. Yeah.

I wouldn't say that. I wouldn't say that. But it is a confusing system. Right. But that's very different than other systems in the Western world. So if you look at Europe, Canada, right, they have socialized medicine. Those are predominantly socialized medical systems versus ours as an employer base. And that all started under Truman.

Back in the 40s, we had wage controls. Inflation was high. Employers, the tax rates were really high. The marginal tax rates were really high. So if you were to come work for me and I was going to offer you a raise compared to where you were, it didn't really matter because you weren't going to keep most of it. Right. If the marginal tax rate's 90%, and I give you a $10,000 raise, okay, great, I got an extra

$1,000 bucks. So what can I give you as an employer? I can give you health insurance. And so that's a way for me to give you additional compensation. And the government structured in a way where there was a tax benefit for employers to do so because it's tax deductible. And you were able to get your health insurance. We offered on a pre-tax basis.

So if you work for somebody and you buy health insurance through your employer, it's the money that you're paying for the health insurance isn't taxed. So it's pre-tax. So you're getting a tax benefit for doing that. So I think it's important to understand. That's why that's the system that we have today. And I honestly think that's one of the things that's, it's kind of wrong in my perspective. Why should my ability to buy health insurance and get favorable tax status matter if I buy it through my employer or if I buy it through. on my own through an exchange. I should get the same tax benefit for it.

What is the argument against that? For not allowing the same tax benefit depending on whether you go into the open market or you go through your employer. You know, I don't really know the answer to that. Yeah, I'd be curious to hear how they don't. Because again, you're looking at the same end state. I wonder why they would separate that. So if you're going to go through like HSA or if you're going to go out in the open market, it is no longer pre-tax. It's not pre-tax. Now, there's been discussion. about changing that to where you can. There are certain instances where if you buy a non-ACA plan,

like an individual limited medical plan, there are rules around being able to tax it like that if it exceeds a certain percentage of your income, like eight and a half percent, but for most people, it's not going to exceed eight and a half percent of your income. But by and large, if you're buying health insurance through an employer, it's going to be you're going to get preferential tax treatment. Which is a good thing.

Yeah. Yeah, I mean, I mean, yeah. So how did it grow from your hometown to California, which, and then I assume other states probably adopted that? And it seems like it started geographically, like a city particular infrastructure, probably problematic if you were to travel, but maybe people were traveling less because of, you know, whatever, the means and ability to travel. How did that grow into this system of what we have now and where are we now? Yeah, so you saw kind of this surge of insurance companies. So I had mentioned earlier, if you were to look back 20, 25 years ago, we had about 15 to 20 different health insurance companies that are out there. And as the Affordable Care Act was passed in being phased in the law, one of the things that you saw happen was this massive consolidation of health insurers.

So where we had 15 to 20 different health insurance companies, we now have four big ones. And they're all the names that people know. It's the blue, the United Health, the Cigna, the Aetna. there's a Humana, but Humana is not really in the employer marketplace anymore. It's more government. So what they've done is they've consolidated. They bought up all the other players to create size and scale. That's the first thing that's happened.

So there's not as many, there's not as much competition. Okay. And I'm going to overlay this with how health care works too because the two are intertwined. So in that same time period, not only did we consolidate the power, if you will, into fewer hands, those four big players have vertically integrated. So they've now gotten into the healthcare ecosystem. So think about now, we've controlled this top layer here. There's only four of us left.

How can we make money? So there's an important thing for people to understand about how health insurance companies actually make their money. And there's this thought that we're going to take the premium. So you're going to pay me $1,000 a month for insurance coverage. And I'm just going to deny all your claims. And I get to keep it all as profit. But the legislators, you know, they're, I won't say smart, but they thought of that.

It's interesting. You know, they try to think of everything when they make their laws. But as it turns out, everything's a lot to consider. Yeah. And they didn't think of everything. And the private marketplace is pretty smart. And they can move faster than the legislators. They move way faster.

And they also have deep pocketbooks to help pay for, lobbying in Washington. In fact, health care is the largest lobby in Washington. Is it? Yeah, it's $6 billion over the last 10 years. Damn. So if you think about that, right, that's bigger, that's two and a half times larger than oil and gas and defense combined. So just to put that into perspective. Say that one more time. So the money that the health care lobby has spent. So this is going to be hospital groups, big pharma, insurance companies, physician groups. If you aggregate all the money they have spent in Washington lobbying our politicians, it's more than two and a half times the amount of money

that oil and gas and defense have spent combined. Again, I would have, I would have guessed that was completely inverted. If you would have asked me who spent more, I would have, I don't know if I would have said O&G, but I definitely would have said defense would have been up there. Yeah. Two and a half times is what health care has spent. Holy cow. So you ask yourself the question, right? With that kind of money and that kind of time, if some, somebody want to change, don't you think we'd have it? It reminds me of, have you seen Moneyball? Yes.

So there's a scene at the end of that. No, there's a scene at the end of the movie, Billy Bean sitting there with the owner of the Boston Red Sox. Yeah, they're up in the suite. They're up in the suite. And he tells him, he says, you know, those that are in control, when somebody's trying to, the first man through the wall, it always gets bloodied. And those that are in control, they've got their hands on the switch and they go

that shit crazy when somebody's trying to change their way. of making money or doing business or what have you. That's exactly what you see in healthcare. They don't want the change. And in fact, they're lobbying for more of the same as my personal belief. So kind of down one rabbit hole, but let me continue this vertical integration.

So insurance companies, the legislators thought to themselves, we don't want to let the insurance companies take in all this premium and then make a bunch of profit by denying our claims. That seems like a pretty bad system, right? So what they did is they said,

okay, we're going to require you to spend a minimum of 85%. This is for the average employer, large employer, we're going to cap the profit margin that you can make as an insurance company at 15%. So on an individual marketplace and small employers, they can make 20. But let's just say 15 to 20%

is their max profit margin they're able to make as an insurance company. So the government is levying this on top of these insurance company, setting a max line in profit. Yep, it's called a medical loss ratio rebate. Okay. So the concept here is you're going to take a bunch of money from Americans, and we're

going to force you to pay for their health care. We're not going to let you profit by denying all of their claims. That just seems like a profit 15%. Yeah, but you got to do your shit. That's right. That's right. That's right. So the insurance companies look at that and said, okay, I'm publicly traded.

I'm United Health Group or I'm Cigna or I would say Aetna, but it's, Aetna is actually owned by CVS. We'll talk about that. The pharmacy? Yeah. Okay. Yeah, yeah, yeah. Make sure we come back to that.

Okay. Let me make a note here on that. So the insurance companies look at this and thoughts on themselves. If you're publicly traded, you're the CFO, you're the CEO of any of these big insurance companies. And you have to show a return to your shareholders. And you've got to show growth. What is your incentive? Do you want to make 15% of a million dollars of premium?

Or do you want to make 15% of a trillion dollars? I'll take a trillion. That's right, man. It makes total sense. So their thought process is, okay, what do we do? How do we get the premium to rise so that we can make the same percentage of a much bigger number? Yeah. So immediately the incentive is now conflicted with what you and I and every other American wants, which is lower premiums. I can already put myself into the head of the legislator saying, this is going to be good. We'll lock him in right here. How out of control can it get? And I can instantly, not that this happens, but I just most of my imagination goes back to movie scenes where it's a dark conference room in the middle of the night. These people in suits that exceed our net worth are sitting there like, okay, what do we do? And they just come up to that simple answer.

Oh, I know. We just make the number we're multiplying by bigger. Yep. And so what you just described is probably I envisioned the same thing that probably happened. Yeah. Okay, here's the mousetrap. How are we going to maximize shareholder value? How are we going to make money doing this?

Well, the government gave them the multiplier integer. So they only have one side of the equation they can work with. they well no they actually have more than one side of the equation they can work with this is where I'm this is where I'm going with this okay so they looked at it and said okay we can only make 15% of this insurance premium that we take if we make any more than that we've got to give it back to the policyholders that's the rebate part of it so if they make too much they give it back and actually during COVID when healthcare utilization was a lot lower some of the insurance companies did end up having to give some of the money back the premium back to the employer

So they took the money from. But what they've done through this whole cycle, this is even before the ACA was passed, but it accelerated exponentially when the Affordable Care Act was passed. What they started doing was acquiring health ecosystem assets. So you've probably heard about pharmacy benefit managers. Maybe. I'm not going to say I have any understanding what it means.

I'll break it down. So a pharmacy benefit manager is an entity that sets the price for medications that the insurance company is going to pay. separate from the pharmacy itself, it sits in between the two? Yes. Okay. They're dictating the contracted price that they're going to pay the pharmacy. Gotcha.

Okay. And then how much the insurance company is going to reimburse for those medications. Gotcha. So if you're the insurance company and you own this entity that's dictating to the insurance company what you're going to pay. You twist the dial right there. You twist the dial. So you say, okay, this medication really should only cost 40 bucks. We're only going to, we're going to tell the pharmacy to charge $50.

And you ask yourself, why would the insurance company be willing to pay more for a medication than it actually costs? I mean, obviously, there's an inherent benefit there to them somewhere. The Medicaid, they're going to give $40 or the pharmacy. The pharmacy is actually charging the insurance company, 50. That extra 10 bucks, profit in the back pocket of the insurance company. What do they report that as? What line item does that come under? It actually shows up in their financial statements if you look at.

In fact, I got some of the information here. Let me ask you this. Okay. If you were to break down Cigna's revenue, so they just reported their fiscal year 2024 financial information. This is all public data. They're a publicly traded company. $65.5 billion in revenue. How much of that revenue do you think came from insurance operations?

Just a percentage or a number. From insurance operations? Insurance premium. I know what my mind inherently tells me, but it's also saying that's definitely wrong. Does it feel like it would be, it's going to be wrong. You're not going to guess it right, but just give me a, I mean, you think it's like half their operation? You would think so, right?

Because it's, it's the premiums. But I feel like, like many other entities, they have these other bottom below the top line item expenses that are bringing in so much more. I'm going to say 30%. Okay. That's actually a pretty decent guess. It's 18% of their revenue. came from insurance.

That is shocking. Yep. So 82% of their revenue comes from pharmacy benefit management and health care. They own health care and specialty services. So these are going to be like physicians and specialty medication distribution, those sorts of things. So put that into perspective, the majority of their money is coming from outside of the insurance operation. The actual fees that people are paying them are businesses. So that's only 18% of their top line. Holy cow.

Yeah. So 45% of their revenue is coming from pharmacy benefit management. And so in pharmacy benefit managers, they make money two different ways. Actually, there's a lot of different ways. But $25 plus billion out of that one company right there. Yeah. It's almost $30. Yeah. It's almost $30 billion. So Cigna owns the nation's largest pharmacy benefit manager. It's called Express Scripts. and it falls under this division. So it's all these, it's all hidden kind of, not hidden.

It's, it's all baked into their financials under this unit called Evernorth. So Evernorth is physicians and specialty care, and it also owns Express Scripts, which is the largest pharmacy benefit managers. So pharmacy benefit managers make money in a lot of different ways, but the two biggest ways they make money, you've heard of rebates, right? So this is money that a drug manufacturer, call it Pfizer or Merck or, Merck, or whoever, right? They want their drugs to be on the covered drug list. And to get on that covered drug list, an insurance company or a pharmacy benefit manager is going to look at them and say,

okay, cool, how much are you going to pay me? What's in it? And I've heard this from different folks in the industry, right? So there's a drug manufacturer that can produce a drug and sell it for $100. The PBM doesn't want to cover it because there's not a rebate to them. The PBM says, I need a $150 rebate every time this drug is filled. So if I fill 100,000 of these medications, I want $100,000 times $150. It's like 1.5 million. So it's like me coming into the coffee shop and I want a cup of coffee and it's $5. And I tell you I want a $15 rebate every time you fill a $5 cup of coffee.

I'm not going to give you that coffee. Because you lose money, right? Yeah. drug list by the insurance company, they've got to pay the rebate. Well, that now means they've got to charge $250 for the drug. They've got the $100 that I want to make and then the $150 that I've got to give to the PBM. So what would be a normally $100 drug is now a $250 drug. The drug is charged to the insurance company when it's filled for $250. $150 is going to get kicked back to the PBM. And then when they're doing this behind the scenes, is it changing what people are paying at the counter?

Like, I'll get a script filled. And for me, it's like four or five bucks through TRICARE or whatever for like, say, like a generic or something. Usually. Actually, if not always. Is there a different cost to the person coming up and paying? Or is this all happening behind the scenes because they're just charging up to the insurance company and the money is just circular?

It does come back to the individual when they're buying medications, especially if somebody's on a high deductible plan with an HSA because you have no co-pays. You're paying the insurance contracted cost. for the medication at the pharmacy until you've hit your deductible and out of pocket. And then the insurance will kick you in from there. And then the insurance company will kick in. So. Yeah. So until you hit that point, you're 100% directly bearing the cost of that. That's right. That's right. And so the insurance company's profiting. So that's one way.

Can you imagine if they had to disclose, like as you come up to pay, your pills are $250. We just want to let you know that $150 that is a rebate back to the PBM. And really the only cost you should be paying is $100. head and swipe it for 250. Well, it's funny that you mention that because it's funny that you mention that because the for these pharmacies to be in network with these insurance companies, they have a non-disclosure policy. So your pharmacists will can literally, as he's keying in all the information, he knows what his cost of that medication is and he knows what the cash price is. And he knows if there's a discount card somewhere that you can get the medication cheaper. But by his contract or their contract with the insurance company, they're not a lot

to disclose that to you. They can't tell you that. I have had some pretty cool pharmacists. at the counter who have discussed different ways to acquire the same thing at a different cost. Yep, yep, those are good people to do that. Yeah, because I think they realized the fucked up nature of the system that they're working in. Yep, and you see the same thing with doctors

because I go in and I'll ask somebody, what's the cash price for this? And I made the mistake years ago, I had given them my insurance card, and they quoted me a price of like 250 bucks. I was getting an x-ray done and an office visit and all that. What is it if I pay cash?

I'm sorry, sir, we're not allowed to disclose that to you. It's like, what? In what world does that make sense? By contract with the insurance company, we're not a lot of disclose what our cash price is. This is before pricing transparency. But it doesn't make any sense. And so I push further and say, well, specifically, why can't you tell me that?

Because if they find out we're telling you that we can give you a lower price, they'll actually kick us out of the network and we want to stay in the network. That's almost where you got to gamble and say, I don't know what it costs, but I'm going to pay in cash and you just got to wait until the receipt comes out. Or you come in and just say, hey, I'm a self-pay patient. What is the cash price? Yeah, never give them your insurance card. Yeah.

And then ultimately, if you're going to run it through insurance. Yeah. Now. And I'm not giving medical advice anybody. I'm just talking about in this situation. But now pricing transparency is a law. So hospitals and physicians are supposed to tell you what things cost before you buy it. And they're not always accurate at doing it, but it's public information.

The data is becoming more readily available. Yeah. And eventually what you're going to see probably in the next year or so, it means it is actually available now on apps. But it's going to become more readily available where people are going to be able to look up prices with my insurance at these different providers. What are things going to cost when I need to go get treatment? I'm a fan of that. I think the educated consumer is essential. Yeah.

So kind of tying this back to the insurance company is kind of where we are. So not only are you seeing the same issue occur with medication. you're seeing the same thing occur with physicians and facilities. These insurance companies now own huge physician practice. In fact, United Health Care or United Health Group, you get too confused. United Health Group is the parent company that owns the insurance arm, which also owns a division called Optum. Optum is their pharmacy benefit manager.

But they also, through that Optum arm, own employee, should own employee, kind of the same thing, dictate to the practices. but physicians, they employ over 90,000 physicians nationally. Isn't this bouncing up against some type of monopoly where they're controlling every aspect of the ecosystem? Yeah. So I've kind of picked on two of the insurance companies. Let's talk about CVS and Aetna.

So one of the big things for these insurance companies is they've got to be able to control distribution. They've got to be able to control their system. That's how they monetize it. And so CVS actually purchased Aetna. Okay. ETHNA is owned is a wholly owned subsidiary of CVS, which CVS owns one of the largest pharmacy benefit manager, CVS Caremark. But what else does CVS own?

Pharmacies. Yeah. Everywhere. Yeah, there's one just down the street, yeah. That's right. And so what you're seeing happen now is CVS controls which pharmacies are in network, which pharmacies are not, and they give preferential treatment to their own pharmacy. And so you're seeing, you know, I saw it in the news recently. there's a number of people that are coming out saying for me to get this medication,

the pharmacy that I was going to is no longer covered by Aetna. They're telling me I have to go to CVS. Think about it, right? I'll give me a perfect example. People understand. Imagine you're building a house. You need a house built, and I'm a home builder. And you come to me, and I tell you, Andy, I'm going to be completely transparent above board with you.

I'm going to make 15%. It's a cost plus contract. I'm only going to make 15%. And the house, just use a round number. It's a million bucks to build this dream house for you, okay? And as I'm halfway through the project, I come to you and I say, hey, Andy, I'm sorry, but the cost of lumber, shingles, the plumbing, concrete has gone up. There's inflation that's going on.

And the price of the house now is a million and a half. But I'm only making 15%. But what I don't tell you is that I own the, the, The subcontractors. Yeah. You own the concrete company that's going to pour the foundation. I show you the bids. Like, hey, here's the data.

But don't disclose that you own the companies that the bids are coming from. Or that I can get those exact same materials or I could go hire other contractors to do it at a fraction of the price. And that's essentially what's happening in health insurance today. They own the subcontractors, if you will, that are sending the bills to the payer, which, I mean, ultimately at the end of the day, it's the American public that's paying for it. Whether you're employed or whether you're buying insurance to an exchange. we're paying for our services in the form of premiums. And so I see that as kind of this big, that's one of the big central issues that's going on.

And, I mean, ultimately people will ask me, okay, what's the solution to this? How was you going to phrase it differently through the lens of, because again, we could keep going on this as well. And as you're talking about all these things that they own and vertically integrating, like I get that from a business-minded perspective of a huge organization and you want to have less fluctuation, so vertically integrating and sourcing things yourself. I get that.

But I can also look at that from that system being manipulated and abused, like you're saying, cost fixing, inflated costs. It's not necessarily being honest about what's going on. I mean, to me, it sounds like a complete monopoly. Not that I'm an expert on the legislation when it comes to things like monopolies, even though I hear all the time of, you know, purchasing deals, especially in the tech space or communication space being held up or investigated because of monopolies, right? They're actively, supposedly on the front air quotes, looking for things like you're describing.

So the question, the lens I was going to phrase it through is what choice do people have? Not necessarily what's the solution, but I don't want people to not have health insurance. I don't want people to be raked over the coals for health insurance either. or just be funding profits from entities and organizations that, I mean, I'm sure there's plenty of people in them that do care, but it seems like, you know what I mean? You could lose the individuals inside of the organization and just say the health care system in general is designed to fuck people. I'm not willing to go that far. But if they want to play in that world, what choice do they have? Well, today, you don't have a ton of choice.

So if you're an individual, you can buy health insurance through your employer. or you can go on the individual exchange and buy an individual policy, or you can go uninsured and pay cash for everything. That's really the options. Rolling dice. Yeah, they're rolling the dice. But I want to back up real quick because we're talking about vertical integration. You're talking about, hey, from a business case standpoint, it makes sense for a lot of people

to vertically integrate because they can control the process, the quality. Yeah, a lot of sectors and friends I have that have businesses, I've watched them grow over time. Instead of subcontracting, they're like bringing it in a house, right? or they're investing back. Instead of doing laser engraving over here, we do it now in-house. I've watched them do that and their efficiencies, and it also does drive profit as well. It does. But let me give you two scenarios that kind of highlight the issue. I always ask myself, who benefits from the vertical integration? Is it the patience or is it the company? I wish in a perfect world you could say both equally. You would think so.

It's more the business, I would say. But let me paint two pictures for you. Like Amazon's a really good example. I mean, I spend way too much money at Amazon. I buy almost everything. Walk goes to the club. Yeah. Right. Where do you call home?

I'm in Dallas, Fort Worth. Do you guys have same day delivery? Oh, yeah? We don't have that shit up here. We do have Amazon and electricity in the internet and running water. Everyone, calm down. We're not bad. It's like, people like, you live in Montana.

How do you do it? I'm like, I drive on these things called paved roads and vehicles. It's like, oh, a horse-drawn wagon. I'm like, no, asshole. We don't have that, though. But do you know how we got same-day delivery? Probably demand. demand vertical integration.

Yeah, yeah. Because what did Amazon used to do? It was UPS and FedEx and Postal Service, right? Yeah. And it was almost drop shipping a little bit to begin with as well, right? Like people would order through the Amazon portal, but then they would ship from somewhere else outside of Amazon. Yeah, but think about what happened, though.

So now it's creative efficiency. Amazon can control the process. And the profit margin that was being captured by UPS or FedEx, they now capture that and they're able to pass those savings on because I get free delivery. I can get it free same day. Right? If I buy over $25 of qualifying order, I get it free. And don't forget your prime membership for whatever it is.

That's right. That's right. But there's value being shared with me as a consumer. Especially when you array it against how long it would take you to go to a store. You know, you're valuing your own time. Yeah, I get what you're saying. And also there's a ton of competition. It's transparent on Amazon.

I can look at reviews. I can see what it costs. and Amazon will even show me, hey, if you're interested in this product, like here are 10 others that you should look at. I don't like that feature. Tell me why. Well, I can manage that.

My wife, who hopefully doesn't listen to this episode, may not be able to manage it as well as I can't. Okay. Whoever created that, fuck you. Because I can't look at those things because you know me better than I do because of the vast amount of data points I put into the internet.

These algorithms training ads, they know what you want before you know it. well. Yeah, they know what you want before you know it. I didn't even know that I wanted it. Add to cart. Let's just send it to the house. Yeah. Yeah. Well, what's interesting with the data that's available now, the internet, Google, Amazon, they know you better than you know yourself because they're benchmarking you to everybody else that lives in a certain metro service area. NSA, they know what you make. They know what you drive. They can predict what you're going to buy before you even have the thought that you want to buy that.

It starts flirting with what is free will. It does. It does. So take the Amazon model. Yeah. Compare that to an insurance company. Mm-hmm. Vertical integration.

Are we paying lower prices today? Not that I'm aware of. We're not. But our insurance company's reporting record profits. Yeah. And so then you look at that, the two different models and you realize the value that's being created by the vertical integration isn't being shared. It's being, it's not being shared with the, with,

the public, it's being shared with shareholders. And therein lies the problem. It's not competitive. And they're still capped at 15%. So they really are just trying to lever it against the biggest number they can multiply if you if you break down all of their earnings, the majority of the income, the money that's actually made is coming from other than insurance. It's almost is that free and clear of the 15%. Yeah. Oh, yes. Of course. Yeah. Yeah. Okay. So it goes back to it's like, hey, we close the front door. Yeah. Legislatively. Windows are open. The windows in the back door are completely unlocked or a completely open. And so this is where, yeah, so the 15% profit margin only applies to the insurance company. The rest of this is unlimited profit potential and there's

not much competition. The three biggest PBMs, which are owned by the, you know, CVS, Cigna and United Health, that's 80% of the market. What's amazing is that 15% number would be in a an amazing political win for whatever party was able to ram that through. We are capping profits of big, fill in the blank medicine at 15%. And people would celebrate that. Like, thank God. Yeah. And not necessarily look any closer.

Like, I didn't understand all the other little dials, the windows and the back door that was open as well. But of course. Of course. Well, let's, I'm going to twist the knife off a little deeper. And then I'm going to tell you how we fix it. Okay. Okay.

So let's twist the knife off a little bit. little deeper here. So the government figured this out. Okay, the insurance companies are making money by doing this. They're making a lot of money on medications. We got to figure out how to shut that down. So we're going to make them give back the rebates that they get to the payers, which is going to be the employer. So if I have a company, I insure people and all the medications that are filled on my plan generate half a million dollars in rebates. The insurance company or the PBM is supposed to give that money back to me. Oh, they're not going to like that.

No, they don't. So what they did is they went offshore and they created these entities called group purchasing organizations, GPO's. And so each of these insurance companies own one and they're in Switzerland. And so, I mean, non-disclosure government's not going to get anything out of them, right? And so these are owned entities offshore. they are the entities that are contracting for the rebates with drug makers. And so the payments, so just follow me here real quick.

Yeah, I didn't know where you're going. So the payments from Pfizer, which by the way, Pfizer owns, so CVS, Kerrmark has a, their GPO is called Zinc, and that's a joint venture with Pfizer. So Pfizer's helping them do this. So the payments that go for rebates go to Switzerland. They determine how much they're going to give back to the pharmacy benefit manager. And the pharmacy benefit manager will pass those on to an employer that's self-funded. If it's fully insured, they're not. So if you run a cell, I don't want to get two in the weeds, but there's a couple different

ways you can set up a health insurance plan. If you're a self-funded health plan, the rebate should be going back to the employer. Okay. But the rebate may be a thousand bucks, and we're going to kick over 300 of it back to the PBM. So in they passed the $300 on to the employer, did you really get the full rebate? No. No, because it was $1,000.

And the claim was paid using the employer's money to pay for that medication. It was $1,000 that should have come back to the employer, but the PBM kept part of this. So all of these major entities have those overseas? Every single one of them. Called a PBO? A GPO. Group purchasing organization.

Fuck. So, right. So now you see the conflicts of interest that are there. There's, there's a, at the very start, there's a misaligned incentive. Yeah. Then there's conflicts of interests. And that's how our system is designed. And so, and we will probably get into this, you know, Trump's executive order for most

favored nation. I don't know if you saw that. That came out a couple weeks ago. He's, uh, he's been signing a few of those. I think he's probably going to be the best thing that's happened for the American people when it comes to health care. Yeah. Okay.

Absolutely. Absolutely. So the one you just mentioned, what's that one about? So there is a, uh, an executive order. that he issued, he signed, that basically gave drug makers, essentially six months to match the price of an available medication in another country here in the United States. So I'll give you a perfect example. There's a medication called Stellara, and it treats Crohn's disease.

It's autoimmune conditions. Depending on the dose, right? So it's all dose dependent. But that drug is going to cost about 100. $150,000 a year for one person to take. It's life-saving medication. Okay. But I can get that same medication for about $40,000 in Vancouver. Okay.

Same exact drug. Fraction of the cost. And Trump's example that he used when he was announcing the executive order was he's got a billionaire buddy who was in London getting Ozympic. He called it the fat shot. My God, he's his own worst enemy sometimes. Yeah. Yeah. It's entertaining. though. It's not what you expect. I'll give you that. I will give you that it's entertaining and don't give me wrong. I want this administration to be successful. Yeah. But God, the biggest beautiful bill, I'm like, motherfucker, can we act as if, like, can we be profesh a little bit? I'm not capable

being profesh, but I run my mouth with a microphone for living. You're sitting in the fucking oval office. Don't call it the fat shit. Yeah. So that medication, even though it kind of is what it is, it seems like from an outside perspective. Yeah. Yeah. Yeah. I don't know if the potus should be saying that. Yeah.

So depending, I agree. I agree. But for that particular medication, depending on the dose, it's about a thousand to 1,200 bucks a month here in the United States, depending on where you get it. A good of the GLP stuff.

Yeah. Yeah. Yeah. And he got it for like 88 bucks. And so the goal of this executive order is to say, if he can get it in a tier one country, which are going to be countries like Canada, New Zealand,

Yeah. Yep. Yep. So who, whatever country has the lowest price, that's the price that we're going to be paying here in the United States, not, not this overly inflated price. And I like the concept. I don't think it's actually going to work. Where do you think it'll fall apart? Well, I think it's going to get sued seven ways to Sunday. It's going to go through court. And really, probably the right way to do this is through the legislative process. It needs to be codified into law. Yeah. I wonder what their argument would be other than, hey, you're taking our profits. I mean, that is a good argument. I mean, basically, it's because we'll pay it. But why will we pay it? It's because the price is being dictated by an interested party that profits the more we pay. Yeah, with very disillined, a sense of, like you said, and huge conflicts of interest all throughout that system. Which is why I think this is more of a shot across the bow of more of what's to come,

which is ultimately what I think the solution is. because you've got people on one side of the aisle saying, hey, we should just socialize medicine, Medicare for all, while I understand that, because there's a ton of frustration with the costs and effectiveness, efficiency of health insurance in the United States. And then there's this other side that's like, no, no, no, no, no, it's working.

Let's just keep tweaking it. I think there's a solution in the middle. Ultimately, what I think needs to happen is the government, and I think this is where we're going, and you're starting to see some action with this, is we've got to break up insurance companies, We've got to break up their ownership, which is like anti-capitalism, but I don't think we're operating in a free market today. We do that.

Like I said, that's why I asked you the question about the monopoly. We do it in other. Bell communication. We talked about that. In other business sectors. I can see a world where all the sudden price increases are everywhere in these first world nations and then everything just costs the same. All of a sudden, their health care costs are going through the roof. Yeah.

I don't want to believe. that way, but I mean, holy cow, how many examples do we have of not only individuals, but organizations acting in the best interest of their profit over the best interest of people? I don't think the issues the drug makers as much as it is the PBMs. There's studies that are out there that are talking about that show the flow of money through from drug maker to patient and everybody that's in between. When you factor in rebates and dispensing fees and all of that, right? the ultimate cost of a medication, about 40% of that is middlemen.

That is insane. Yeah, about 40% of that's going to be middlemen. So I think the number one thing we've got to do is we've got to break up the existing profit modem, the misaligned profit motive. I'm pro-business. I'm pro-competition, pro-free market. Same. But we don't have those dynamics.

It's more of an oligopoly, if you will, that's going on. And it's forced. So if I'm an employer and I'm a, I go get insurance through one of the big insurance companies and I have a traditional plan, I don't really have a menu to choose from. Oh, you want to do business with us, Andy. I'll sign your employees up, but I'm going to dictate to you. You're going to use everything that we have. You're going to use our pharmacy benefit manager. You're going to use our network. And by the way, all this universe of physicians that I own and clinics that I own, you're going to use those and we're going

to overbill ourselves and profit in the process. You don't really have a choice. There's no choice. Yeah. Because I think if you break it. Well, your choice is you can say no, and that's not going to work for your employees. But where do you go? You're going to go to the next insurance company. That's what I'm saying. That's what I'm saying.

Your only choice is to say no to them and get the same offer across a variety of different organizations. So you can either not provide health insurance or play in that system. Right. Which is why we're seeing this mass shift in the health insurance markets, if you will, it was really my expertise is working with employers to show them want how the system is actually stacked against them today. This is how the insurance companies make money. So I mentioned there's a fully, there's a fully insured way to buy your insurance through a carrier where they dictate everything to you. Most employers, when they move into the self-insured, they're going to take a little bit more

risk. They still let the insurance company manage all of the vertical, if you will. What my expertise is is showing employers, this is where the insurance companies profit, this is where they make money. It's a conflict to what your ultimate goal is, which is to provide the best health care to your employees, but do it in a financially stable way. Be good stewards of your own money. And so we help employers build those plans with the right partners. So we don't use any of those big PBMs that I discuss because they're not transparent. They don't pass rebates through properly. They manage the covered drugs based on how they monetize them versus what's actually clinically effective and cost effective. And that in and of itself, just that sentence, they're going to manage what is covered

based off of what they can make on it, not the efficacy. That's criminal. Yeah, there's, there's so many drugs that are covered by the big PBMs that have very low. Clin, Octavia, a good example. I had a bout of tonal fungus a few years ago, and my dermatologist prescribed me a drug called Jalubia. And you've seen, if you see a drug advertised on television, I think that's another issue we probably should tackle at some point is drug advertising on television. No, it's super effective. It's great. There's only two countries in the world that do it. We should have definitely be one. Yeah, for sure. So it's got this crazy, you know, commercial and my doctor prescribes it to me. My dermatologist prescribes it. It's like a $1,300 a month drug. Okay. $1,300 a month.

and I look at it and I'm just like, okay, what's the, how effective is this? So it's like a, you paint it on your toenails, that's how it's supposed to work. And I'm just looking at it and I actually just Googled it, clinical effectiveness of Jalubia treating toenail fungus. It's like 13%. Oh, wow. 13 or 18%. This is a few years ago. I can't remember the exact number.

But it was like sub 20% effectiveness. 1.8 people out of 10. That's not great. Right. You can get a $4 generic drug called Turbinophene. And it has an 88% clinical effectiveness. Why wouldn't they prescribe that to me? And so I go back to the dermatologist and I say, hey, can you just prescribe this one to me over the other?

And he actually tries to convince me to keep getting Jolubia, which makes me wonder at questions. Does he have some sort of kickback in this? It would be hard to argue having no data whatsoever. Let's say he is an upstanding clinician and you can remove all the other variables except for the effectiveness of it, which, again, I'm not. I don't wear a white lab coat, but 88% effective over 18% effective. I think it's pretty clear. There'd be no other reason for him to try to convince you unless there was a misaligned incentive, like you said. Yeah, it's drug reps coming into their office that track the prescribing patterns of physicians.

So it's the ladies that come in and schmooze the doctors and say, hey, we see you're not prescribing this drug. can, what can we do to get you to prescribe it more? Why do we allow that? I mean, some of it's patient education, right? If you think about a physician education, you know, doctors seeing 20, 30, 40 patients a day. I mean, how much time do they have to actually keep up with the latest and greatest that's going on? I think the stats are like six minutes per patient is what they're averaging. Yeah, yeah, yeah.

So that's another thing we talk about is the changes that are happening in that market as well, what people should be doing. Let's talk about the advertising first. Okay. TV. I love it. I was talking to a friend. I'm of the opinion that, and this, I'm basically repeating what he said. It's not even necessarily about them trying to educate the consumer.

This was a little bit more conspiratorial. They want to buy up all the ad space on those networks so they can exert control over what comes, you know, if they need to editorial control in that network. It's more about that than it is advertising. the drug itself. Buying the ad blocks. So they can say, hey, we're your biggest advertiser. We don't want you to do this, that, or the other.

Or we'd like to see a little bit more of this, that or the other. Like a lost leader that exerts control over the network. I can see that. Yeah. I can see that. Let's be honest. The best part about any ad commercial is the list of side effects at the end.

Oh, yeah. Yeah. I don't even give a shit what it solves. I'm like, okay, get to the end. May include explosive diarrhea while sleeping. this. I'm like, fuck, yeah. Death. Totally. It can cause death.

I mean, there's... Bleeding of the liver. Which is, it's interesting because the commercials always show it's happy music, people dancing. They're at a barque. They're out of barbecue, you know, all of those things, right? What is interesting, though, you'll notice this now that I'm going to mention this to you. But at the end of most of those commercials, it's almost like a car commercial. Remember how they will talk low and fast at the end? It's all the devils and the details. you'll hear somebody come on.

If you can't afford your medication, contact, blah, blah, blah, blah, we may be able to help. Oh, there is that. There is that, yeah. And you'll see it written across the bottom. If you're having a hard time affording your medication, contact us, we may be able to help. What's interesting, though, is if you have commercial insurance, so you're with one of the big insurance companies, they won't give you any of that assistance. So those medications that be covered by Medicare and Medicaid, they've got to set up foundations to provide financial assistance to people that can't afford their medications. And so if you make less than a certain amount of money, in some drugs, it's like, you know, $75,000 to $100,000 a year.

The drug maker will actually give that medication away to you for free. Do you think that they're really effective in gaining consumers, though, on those commercials? Like, do you know of anybody who's ever watched one of those and like Talaffinilufuil, whatever it is? That's not going to be. That's what I always try to do also is read the actual word of what the medication, because it's going to be happy ENSA or whatever it is. Yeah. Yeah. How many people are walking into the dock making an appointment and saying,

hey, just so you know, I was watching the Super Bowl and I need to get a prescription of this happy ends. Because I think I have fill in the blank. Yeah, and I think it's a good question. It's like it reminds me of when I played football in college and my coach, I don't even know if this is a real word, but he would say pariabalo. Have you ever heard of this? No.

You go, we're going to, it's periabalo. But it was a, he was an interesting character. and he really was life-changing guy. But what he was saying is attack simultaneously from all directions. I think I would have just said that. Yeah, that makes more sense than me. He would say it, and then he would say, we're going to attack simultaneously from all directions.

You're talking about defense, right? Yeah. You just everybody, come at him from every direction. And I think that's what's going on with drug making, drug manufacturing, advertising. So to your point about buying influence with the networks, that's probably an intended goal. Yeah.

The other is, getting the patients, potential patients, aware of the brand name so that when a doctor prescribes it, it's like, oh, I have heard of that. That's a good drug. Okay. And then the other thing, to your point, I think it is effective to getting patients to ask for drugs, a good example. Great example. It's Ozmpic. Because when they initially started advertising Ozimic, it was, you know, one of the side effects is you might lose weight. Yeah, because it wasn't, isn't the weight loss usage of that off label anyway? It was for blood sugar control, right? It was for diabetes.

Yeah, diabetes. So the big, so actually GOPs have been around, GLP ones. Yeah, long time. They've been around a long time. Yeah, they just have, they've shifted with the main utilization because it used to be off label for weight management. Yeah, so, yeah, it was off label for weight management. And so then one of the initial ones, I mean, we've had oral forms that can take as a

pill, not as effective. And then we got injections, Lear Glutide was like kind of the first one, but you had to take it every single day. And then patients aren't compliant because they don't want to jab. themselves every day. And so, hey, we just created this shot that is more powerful and you only have to inject it once a week. And oh, by the way, instead of losing five to eight percent of your body weight, you're going to lose 15 to 20 percent of your body weight. And so it was a side effect that they just anecdotally observed. It was never intended to lose weight. They just noticed it as

a side effect. And then the thought is, well, hell, we can just market this as a weight loss drug. And so you see that now. The two biggest GOP ones are going to be Mungaro. And you're And OZemPEC, two competitors, terseptide and semi-glutide. Well, both of those have a weight loss version. It's the exact same medication. It's just under a different brand name. So Wagovi and Zepbound. It's the same exact drug as Ozympic in Mungaro.

It's just marketed now for weight loss. But it's the same exact chemical components. Why do other countries not allow the advertising that we do? What's their argument against it? I'll be making an assumption here. What would your guess be? Because only the U.S. and New Zealand, where the only two countries that allow that,

there's got to be a reason that the rest of the world is like, hey, you're out of your mind. I would have to imagine it's because they don't, maybe undue influence. They want to leave it to medical professionals to make a determination. They don't want to create demand from consumers. It needs to be kind of more pushed by doctors.

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cleared hot. You won't be disappointed. Back to the show. That would be the only guess I can come up with. Yeah, and it makes sense. And that's also... Why do you need to know what drugs are out there? That's for your doctor. I agree, which makes it hard to justify that we still allow that shit. Or it could be from another perspective, right? It's socialized medicine. They determine what's covered, what's not. They don't want you asking for drugs that they're not going to cover or that are not suitable for you. And we see this all the time. Somebody will go in for a medical condition.

They'll go to a doctor and the doctor says, okay, I'm going to prescribe you this $100,000 a year drug. But there's a $50 a month drug that is almost as effective. Or let's start there. Maybe it's a $500 a month drug or $1,000 a month drug. Let's start with the $8,000 a month drug. And I'm not saying if it's the right drug, yeah, let's take it. But doesn't mean, let's don't go from zero to 100. Like there's a progression we can go through.

Yeah. And it's almost like, it's like triaging, if you will, in my opinion. And I've done this myself. It's like I have a choice. I can go buy this really expensive medication or I can start with one. I could go buy the $1,300 a month toenail fungus medication. I'm on a high deductible health plan. I pay for that.

It's almost like antibiotics. Or I can do the Ford Har. Well, it's like antibiotics. They're life-saving and amazing, but an over-utilization of antibiotics can have a lot of negative issues. and some people want to go, they have a little sniffles, Z-pack, boom. Like, that might treat the sniffles. You might also have also done a good job with some vitamin C, a little emergency pack. Yeah.

You know, I am more of a fan of let's work our way up to the big guns as opposed to opening with the broadside from the battleship, just because personally, if I need the broadside from the battleship, I want it to be as efficacious as possible, not degraded because that's what I go to all the time. Yeah, I mean, 10 years ago, if you look at prescribing patterns of antibiotics, I mean, there was a big issue because you got a cold, right? I'm getting over a cold right now. Had one last week. Doctors in the past would say, well, let's just give me an antibiotic just in case. And that's how, you know, I would have taken it. Same. And so, I mean, that, to your point, though, is it going to be effective down the road? I mean, these antibiotics now,

You have bacteria that are becoming resistant because of overuse of antibiotics. Yeah. Yeah, I think the approach of working your way up to those nuclear weapons from a medical perspective is probably a good idea. Yeah. One thing we didn't talk about, we're talking about consolidation and vertical integration on the health insurance side. But I also kind of alluded to the health care system. Yes, yes. So let's kind of link those two together.

think about where did you grow up? Santa Cruz, California. Okay, perfect. So it's a good example then. If you just look at any big city in the United States, this is what has happened over the last 20 years. Anybody listening to this right now is going to resonate with them. And my town in Dallas-Fort Worth area, 15, 20 years ago,

there were 10 hospital systems. And today, we have two dominant ones. So when the Affordable Care Act got passed, at that time, you still had independent doctors. You could go into a family office, maybe one to two, maybe five doctors. That almost doesn't exist anymore. What the hospitals have done is they purchased other hospitals. They've consolidated, just like the insurance companies did.

They consolidated these other hospitals and created one big hospital system. And then to ensure that they got the patients, because I own the building, now I have to have distribution into my hospital facility. And the people that distribute the patients are the doctors. So now I've got to vertically integrate. So what do I do? I go out and I capitalize on this new honoris system of the Affordable Care Act. And these doctors are now going to have to have, you know, compliance departments and

electronic medical records and this huge burden that a small family office of physicians isn't going to be able to comply with. Andy, join our hospital system and we'll take care of all that for you. And so you saw hospital systems acquire physician groups, primary care doctors, specialists, orthopedic surgeons, gynaecologists, oncologists, dermatologists, and imaging centers, clinics, urgent cares. Basically, they've built out this entire ecosystem, if you will, soup to nuts. because you need to capture patients wherever they enter the health care system. Sometimes they're going to go to a primary care doctor because they have an ache or pain and they're going to get referred to a specialist, an orthopedist.

Well, guess what? Your family doctor, your primary care doctor is affiliated with the big hospital system. He's going to refer to a specialist that's also part of that hospital system. 100%. Every time. Yeah. And when that orthopedist needs to have an MRI because they've got to look into your knee to figure out, is the ACL torn? to determine it what's going on.

Straight back into the system. That's right. You're going to get it done at the hospital-owned facility, which is going to be more expensive. And then when that surgery needs to be performed, you're going to have it done in the hospital. Same thing with the baby birth, right?

So your OB-Gen is affiliated with the hospital. That baby's going to be born in that hospital. Even though the specialist across the street that's affiliated with a different system might be better for your care, we don't refer to other people. It's outside our tribe, right? You've got to keep it here in the system.

And the hospitals are tracking that. But where this has become somewhat, of an issue, right? From an efficiency standpoint, it kind of makes sense, right? We've got everybody all under one roof and we're all kind of rowing in the boat the same direction. But what's happened is the hospital systems have gotten really big. And when you're big, you know, have leverage against insurance companies. And so when you may or may not have seen this, but it happens very frequently. It happened recently in Dallas-Fort Worth. One of the big hospital systems was dropping out of network with Blue Cross.

I did not see that. Well, not in Dallas, Fort Worth. Yeah. But maybe in here or in different parts of the country. So the hospital system was basically saying they wanted to detach from that larger entity. They don't want to detach. They don't, nobody wants to detach. The hospital doesn't want to detach and the insurance company doesn't want to detach.

Because think about this. If you're in Dallas, Fort Worth and you're an employer and you've got a thousand employees and you're using Blue Cross and the hospital that's in your neighborhood is getting ready to go out of network, what is that employer going to do? They're going to move insurance companies. Yeah, to do something more convenient. So what causes the hospital to drop out of network? So the hospital wants to make more money.

So the hospital goes to the insurance company. Talking everything in humans is about money, man. It is. And it's driven by the government. The government is the one that's screwing up health care through Medicare and Medicaid is my opinion. Just based on the data that I see. And I'll unpack that a second. I'll tell you this is the government is really what's screwing up at commercial health insurance market.

We'll come back to the. that. Okay. So the hospital doesn't really want to lose all the patients that are with Blue Cross, and Blue Cross doesn't want to lose the hospital because they're going to end up losing employer clients, which is large volumes of business. But the hospital says, look, I need a price increase. I need you to pay me more for my services. And Blue Cross looks at it and says, I mean, at the end of the day, it's not Blue Cross's money. It's not, you know, healthcare's money. They're a middleman. It's like a bookie, if you will. So they're taking an, number of bets on one side, off putting it. So how much risk do I have? How much premium do I have

coming in? How much am I going to pay? And they just need, they need a way to phase it in so that they can continue escalating premiums because they want to be able to pay for the risk that they've got. So if a hospital is asking for more than the insurer is going to be able to push off in a given year, right? It's going to kind of tip the scale. They push back on that. So ultimately what happens is the hospital does drop out of network temporarily. and then there's all these late night meetings and eventually they always work out an agreement and it never results in lower prices.

Basically what I've explained to my clients is like, yeah, the hospital's back in network, but guess what? You're probably going to see increases, higher increases next year because of it. Because health insurance is a symptom. So if you had a fever right now and I put this thermometer in your mouth

and it said you have a 101, okay, cool, I know that you've got a fever, but what does that really tell me? It tells me something's going on. Yeah. My body's fighting something. Do you have COVID? Do you have the flu?

Or do you have some sort of systemic infection that we've got to get you in a hospital for? We don't know. That's the root cause that we're not treating. But employers and just individuals, we look at health insurance and say, well, health insurance costs are going up. What does that actually mean? It means what we're paying for health care is going up. Because every dollar that's spent for health care is going to get captured. The insurance companies are for-profit entities.

They're not going to sell you a million dollars worth of health care and only charge you a half a million bucks for it. They've got to charge you enough that make money, which it makes sense, right? But the way the system's designed today, nobody has incentive to actually pay the right price, to pay a fair price. That's not the way health insurance, commercial health insurance is designed. It's just not because we allow them to overbill for things all the time. It seems to be completely driven by a profit, not patient care. Right, right. So what you're seeing nationally is big hospital.

hospital systems demanding higher reimbursements from insurance companies. Insurance companies are having to pay it. And then ultimately they're passing it on to employers in the form of when they're renewing the premiums going up 10%, 15, 20%. What do employers do? Hey, Andy, the cost of insurance went up. We're taking more out of your paycheck this time. And employees get pissed. They're like, what the heck? I'm paying more. And oftentimes my insurance plan gets worse. Yeah. So tying that back to the government. Yeah, Medicare, Medicaid. Medicare, Medicaid. That's the primary driver of what's going on. Because if you look at hospital system, and it varies by hospital system. But in some cases, 50, 60 percent or more of their patient mix is Medicare and Medicaid. The government doesn't negotiate with hospitals. They're dictated to.

This is the procedure that you had. This is the Medicare allowable. Take it and move on. You can't negotiate. And if you look at the rate of reimbursement is a big topic of discussion right now. There's actually talks about Medicaid cuts for certain things. I was going to say I think it's in the current discussion. Not that I'm following it incredibly closely, but it was like a $500 million deduction across Medicare and Medicaid.

It might have been individually or both. Again, not following it incredibly closely, but I know that's being talked about right now. Yeah. And I'm not a Medicare or Medicaid expert. I mean, there are certain things in that bill that you mentioned. like if you have the ability to work, are you seeking out a job? If you're not seeking out work, should we be covering you? If you're able-bodied and not willing to work, should you get coverage?

I actually think that's a valid conversation. I'm not trying to strip coverage from anybody, but I think we should be able to have conversations around those things. Yeah, yeah. But tying this back to the hospital systems and how they're reimbursed. So there's many instances where a hospital doesn't make much money doing some of these procedures. In some cases, Medicare doesn't actually adequately reimburse them what they need to make money to continue their operation. In some cases, it does, right? But if you look at rates

of reimbursement, best case scenario, they're going up one to three percent a year. Well, the cost to operate a hospital is going up anywhere between seven and ten percent a year. Why is that? Well, great question. Think about what happened during COVID, right? Physicians got burned out. Nurses and technicians got burned out. There's a shortage of all of them. And so there's a talent war going on right now. And to get a physician or to get nurses to come work inside your facility, you're having to pay them more. So if you just look at the average rate of pay for nurses in particular, I mean, that's who's delivering most of the health care and hospital system is nursing. They're going up exponentially. They have over the last 20 years. It's odd too, even here

locally. And I'm speaking a little bit out of school here and a little anecdotally just on conversations I've had with people who work in the local health care system. There's what they'll pay the nurses and then there's what they'll pay the traveling nurses. Yeah. And there's a huge price difference between the two. The traveling nurses are making way more and the nurses working for the organization are having a hard time justifying a higher wage. But then they're willing to spend that, you know what mean the money on the trap. I don't, and I don't understand that. Well, some of it has to do with, and this isn't my expertise, but I do know, I have a couple of friends that are nursing. One of them is a traveling nurse. And so it's a high expertise specialty type nursing care.

It's not like an LVN. It's like somebody that has like very specialized training. A hospital needs a certain level of staffing. If they don't have it, they can't provide the care. And so they're required to have certain staffing levels inside of hospitals, especially for specialty type care. Yeah. And so if you don't have this person that's employed, you got a source it from somewhere. And you just figure out how to make it up somewhere else. And so if the government is only going to pay me $1,000 for this procedure and it costs me

$990 to perform it, and my costs are going to continue to go up 7 to 10% every year, I can't negotiate with the government. Who can I negotiate with? The insurance companies. Yeah. That's the pressure relief valve, if you will. It's like a tea kettle. It's like, just got to blow the steam off somewhere and where are you going to do it?

It's the only place you can negotiate. And as you have described, eventually, as it cascades down the waterfall, the people who are getting their heads pissed on while being told that it's water from the waterfall are the people paying the premiums. Yeah. At the end of the day. As it comes all the way down, it terminates on you and I or employers, either paying, for our own health care or employers paying for their health care.

I mean, honestly, one of the biggest benefit about being medically retired from the military is the tricare benefits. For me, that's the largest single benefit. Yeah. So there's a lot of talk and a lot of pressure. We've seen it. Just look at the most recent situation with the United Health Care Executive being murdered in New York. Yeah.

Right? And so if you just go pull up any social media channel and look at the comments, It's shocking how aligned a lot of people are with the guy who shot a dude on the street. 100%. Yeah. At one, it's sad. But I think more importantly, it's it illustrates the frustration and the demand for change in our healthcare system. Yeah.

And so there's a lot of clamoring happening right now for the government to do something. And the government should absolutely do something. I just illustrated. You got, there's common sense things that can happen where we can, these entities can still be for profit, but they shouldn't be controlled by the same group of people. They need to be split apart, be their own operating entities. And each of the insurance companies should be incentivized to work towards good financial stewardship. And it shouldn't be profit at all costs. Okay.

So, but for the last 10 years, while the government, hasn't been doing anything to solve, I don't say anything. There have been things that have been done. It may be fair to say the government hasn't done anything over 10 years. Yeah. In my industry, there's, there's been a number of things that have happened that have actually been good, but not enough. So employers

will typically, because, you know, again, you know, if you've got 50 plus percent of a population that's buying health insurance through an employer, this is what's crazy in America. You're offering me a job and you have health insurance, cool. That employer next door could offer me a job and they offer health insurance.

Cool. The experience when both of those employers can be vastly, vastly different. And every American that's getting an insurance policy through their employer is subject to how good of a manager of health insurance is that employer. And I can tell you, because I work with hundreds of employers, they're not all created equal. Yeah. Some of them are very astute and know how the system works and they're doing everything they can to manage it as good stewards of not only the company resources but also the employees money and others are completely oblivious to what's actually happening in the marketplace and they're just getting pillaged and they don't think there's anything they can do about it and let me give you a good example i get

it's a personal example to me i watch this happen to my brother so my brother um he worked for a fortune 500 company in houston and he He had a series of pretty bad health events over the course of about a four-year period. He had multiple issues that were going on. He was hospitalized over 26 times over this four-year period. Yeah. So he worked for a really big company. I won't say the name of it.

And over the course of that period, and we kind of alluded to this as we were walking over here, he had health insurance and he was bankrupted because of his deductibles, out of pockets, out of network costs. So that's a completely separate subject. This is, he saw providers that were not in network, some of which he didn't even have a choice because they were just in the hospital. And then there were procedures that were done

that the insurance company deemed not medically necessary. And so he's getting just built with all of these bills and it bankrupted him. And the wild thing to me about that is one of my clients literally is a mile and a half from where he worked, the exact same industry. and they're not a Fortune 500 company. They're a large regional employer in Texas.

And they offer their employees free health care. And so had he gone in to the hospital that he ultimately got the life-saving care that he needed, he would have had no deductible, no out-of-pocket costs, and he would have been cured and wouldn't have all these medical bills. And that's just through the difference in how those two entities managed the system. A hundred percent. So the large national employer that he worked for, the Fortune 500 company, they were working with a big insurance company, and that big insurance company managed everything. The pharmacy benefits, the network, soup to nuts. They managed everything.

This employer that I work with is a client of mine, they recognize that the system's completely broken in its traditional form. We're going to create an agreement with the hospital directly. We're going to say, hey, we're not going to go through this insurance. network. We're not going to let them dictate, you know, some disinterested party in another state. Why should we rely on them to get a price? Like, just tell me what you want to get paid and let's work out an agreement. And that's ultimately what the hospital decided to do. They said, okay, cool, we'll, we'll give you a better, actually they have better pricing than what the big insurance company had. And the insurance company is okay with them working with them directly

and still working with the insurance. They don't have a choice because the employer is self- meaning they created their own health insurance plan. Interesting. And so there's insurance involved that pay that is kind of a backstop to it. I don't want to get too complicated in the weeds. But most large employers, that Fortune 500 company that I mentioned my brother worked for was self-insured too. They just turned everything over to the insurance company to manage for them. Oh, which I'm sure the insurance company had no problem doing.

They don't. Basically what you're saying to me is that in that scenario is you're going to take a lot of the risk and I just get to make the profit. Yeah. That's what they're doing. Give me your ticket, hop on the ride, and I'll tell you when it's over. That's right. And so this particular employer said, we're going to work with an administrator. So no company wants to pay their own claims.

They're processing pay. They don't have an insurance apparatus to do that. But what they do is they partner with somebody, like what the employees would view as the insurance company. It's an administrator that the hospital and the doctor sends the bill to. They figure out what they're supposed to pay. And then they tell the employer, this is how much you're supposed to pay. This is the right price. And the hospital agreed to the pricing.

And the reason why we're able to make it free to the employees is because we're getting such a better deal than what the insurance company normally would. So your choice is go to this really well-known, reputable hospital, and it's free. Or you can go to the one across the street, and it's just going to be subject to deductible and out of pocket. And so the company that's providing it for free, are they basically just banking cash and a fund of some kind to use a very broad analogy for when those costs come up? Yeah, 100%. So in essence, what this company's doing is they're saying, okay, we're going to be willing to take a certain dollar threshold of risk for an employee. So if you and me had a company, we might say between the two of us, our company is going to take $25,000 of risk. So if I get cancer and it's a million dollars, our company is only going to pay $25,000.

There's an insurance company behind them that's going to pay the other balance that's due. And so it gives companies this predictability of, I know my risk is capped. And there's an insurance company behind me, which by the way, it's not the big four insurance companies that are standing behind. There's dozens of companies out there that will do this. They're big global A-rated companies that do this. They're in the business of buying risk. Yeah. So from your finance background, when you're working in finance, how long did it take you starting to shift your optic and look at the health care system to really get an understanding of what's going on behind the scenes?

So yeah, when I was in finance, actually one of the biggest brokerages in America was a client of mine, and I was helping them raise money to do acquisitions. So much like on the health insurance side and my industry, there's consolidation going on. There's a lot of M&A activity. And so I understood looking at the financial statements at a kind of an enterprise level. This is how they make money. And I was having a discussion with the CFO one night, and he was explaining to me about how the affordable care. Act was going to be one of the biggest booms in the industry in our lifetime. Which for clarity, I don't think was what the Affordable Care Act was supposed to do. Well, if you take, well, here's also another problem with titles. Maybe don't call it the Affordable Care Act. Maybe, you know, in my understanding, it didn't necessarily make things a lot more affordable for a lot of people. And it had nothing to do with care. It was insurance.

It was an insurance bill. There was no provision in there to... It sounded great on the headlines, though. Everything's about names. It's about controlling the narrative, right? They didn't have a provision to increase the number of doctors in the United States, increased competition amongst hospitals. It didn't do any of that.

I actually did the opposite. So this is a conversation you're having with a guy in the insurance space, talking about how the ACA is going to be the biggest boom they've ever seen. Well, think about it. So the Affordable Care Act forced everybody to get health insurance, or you were going to pay a penalty. Yeah. So now what's going to happen?

is more people are going to have to buy it, and employers are going to be required to offer it it or they're going to pay tax penalties for it. So what's going to happen? You're just going to create a larger supply of people that are insured, which in the traditional brokerage industry, the more people are insured, you get paid commission based on how much premium is paid. So if you have more people paying in, that means premium goes up, commissions go up. And so, and they also understood the second and third order effect is that all these people they're going to start being insured, they're going to have medical claims, which is going to cause premiums to rise even further. Commissions go up even more. And the other thing, it's like a river that

flows uphill. Well, and the other thing on the back end of this, though, those big insurance companies will pay brokerages, people in my industry, bonuses at the end of the year, which used to be undisclosed. That's one of the thing the Trump administration pushed on is that we have to, we should be disclosing our compensation how we get paid. Because how I get paid is going to dictate how I'm I'm going to treat you in a business situation. Well, it will inform people or illuminate whether or not your incentives or aligned or misaligned. That's right. That's right.

So a lot of these big national brokerages, because they do a ton of business with the big insurance companies, they get paid massive bonuses to not only keep, but continue putting more business with those insurance companies. So if you were to seek out advice from two different brokers, one who's being paid the bonuses versus one that's not, you might get a little bit different advice. For sure. Right? Okay. So that's kind of how I became aware of, okay, this is what's, this is a dynamic that's happening on the insurance side. And so I started asking my other clients. So I had clients that were manufacturers and wholesale and distribution and oil and gas. And I would go into these companies and I would ask the CFO and the CEO, hey, I'm looking at him at your financial statements here. It looks like health insurance is going up pretty substantially over the last three years. What are you guys doing to manage that cost? And I'll almost, I kid you not, almost to a T, every single one of them said the same thing. You know, that's an interesting question. There's not really anything you can do. It's whatever the insurance companies tell us, and our broker tell us our costs are

going to be for the next year. We budget for an increase and we just pray that it falls in line with what we budgeted for. And I thought to myself, we're not, it goes back to the thermometer example. We're looking at the wrong thing. You're looking at your health insurance, but are you actually looking at what's driving the cost? And so we've turned the keys over. this management of a division of our business, because make no mistake, if you just look at any of these companies, I had a big national manufacturer of fans was a client of mine.

They spent more on health care than they did for the plastic that they bought to box their fans in. Damn. And I don't know this to be 100% true, but one of the statistics I've heard is that GM spends more on health care than they do on steel. Look that shit up, Michael. Yeah, Michael, look that up.

I'm curious about that. Also, look up the number one cause. of bankruptcy in the United States. I'm pretty sure it's related to health care costs. Yep. Yep. So, I mean, that is a common theme. So if you look at bankruptcy statistics, and Michael, if you look those up,

I want to say it's like seven out of ten bankruptcies in the United States have medical bills associated with them. Let's see. Apparently, the leading cause is medical debt. Fuck. As many as 66% of people who file for bankruptcy blame medical bills is the primary cause. And then the second question is going to be is how many of those people have health insurance,

which I'm willing to bet you that more than half of them do. Yeah, especially in the modern era where it's essentially required. Yeah. So what does that tell you? It tells you that the system doesn't protect you from catastrophe. You buy homeowners insurance to protect you from fire and catastrophic loss. Until they'll no longer cover you anymore because you live in a fireplace. True.

True. Good luck getting fire insurance in Palisades. But if you had it when you had it, when you have it. had the loss, right? You're buying the insurance to protect you from, from catastrophic loss. And so you need the health insurance to stand behind you when you, when you have that catastrophic loss. That's the whole purpose of it. I mean, here's the statistic that I guarantee you is 100% accurate. Right. Ain't none of us getting out of here alive. That is very true. Right? Yeah. And we're going to incur some sort of medical event before we leave the earth.

Probably. That statistic is valid, right? So, That's why we buy health insurance. Protect us from that. Protect our families. Yeah, same as car insurance. You're trying to protect yourself against the catastrophe that you don't want to budget for, essentially. So GM does spend more on health care than it does on steel. Pull that up so I can see that, Michael.

Drag that across. That is fucking insane. It is. So I started talking to these employers, my clients. This is before, this is when I was in finance. It adds $1,200 to the cost of each. GM vehicle. They'll, there, because of course, GM's not just going to eat that.

No. Because they are also a public company, beholden to the shareholders. So I'll read it says, the nation's largest purchaser of health care insurance is suffering from the burden of spending $4.5 billion annually covering 1.2 million workers, retirees, and their spouses. That's more than we spend on steel. It adds $1,200 to the cost of each GM vehicle. Yeah.

So it's a real issue that- Imagine if that was listed on the sticker. on the side of the car. Yeah. Well, it really underscores the biggest issue that I see, which is health care and affordable health care is a societal issue. We're paying for it, one way or the other. Yeah. But we're paying for it indirectly. It's a hidden tax. So I go back to the example of the way Medicare and Medicaid pay hospitals versus the way any of the big insurance companies pay. And nationally, an insurance company is going to pay anywhere between two and a half to five times what Medicare pays.

That's the hospital can force them to essentially, right? 100% right. That's right. So what does that mean? That's a hidden tax on you and me and our employers. At the end of the day, it's a hidden tax on all of us as employees that are buying health insurance to our employer, whether your employer pays most of the cost or, I mean, ultimately, we're paying for it.

We're paying for it in the form of not getting a pay raise. We're paying for it with the costs out of our paycheck. We're paying for it when we walk in and how. have a baby or have a surgery or buy a medicine, it's a hidden tax on our society. And when you look at what the average American makes versus what they spend for health insurance if they can afford it, and they're going to cover their family, in many cases, it's 25, 30, 40 percent of their income. By the time you factor in what do they pay out of pocket, this is a real societal issue,

which kind of goes back to what I was mentioning before. when you, you know, you take the employer that I described, the one in Houston that's a client of mine, you would think, okay, we're offering, the employer doesn't charge them deductibles and out of pockets to access the hospitals that they've got these agreements with. So you can walk in there and deliver a baby, get a cancer treatment, have a surgery, have an open heart surgery, and the hospital's not going to charge the employee. The employer's going to pay the full cost of that health care because they're getting it at such a big discount. It's a fair price. That's the, the incentive for employees using that hospital, but you can go to any hospital that you want to. But you would think if an employer is offering free health care to their employees, the cost of their health insurance, it's got to be outrageous, right? That would be my natural assumption, yeah. Right. And it operates about half the cost of the national average. Well, yeah, you're cutting the middleman out. You're cutting the middleman out. But the employer still has insurance. The employer is still offering insurance. They've got an administrator that's doing it for it. It's actually really,

really simple. And so my goal is to show employers how to do this to create savings for their company. So my thought when I got into the business, so I'm kind of tying all this, I'm going on a bunch of different rabbit holes. My thought getting into this industry was I can help employers increase their profitability by reducing what's driving their health care costs. Yeah. So if you're spending two million dollars on health insurance for your employees, and I'm able to cut half a million dollars out of that, which is really easy at a $2 million spend. I just saved you half a million bucks. Yeah, it goes right back to your top line.

Yeah. Or you're straight to your bottom line. Yeah. And a lot of these companies are privately owned. So they don't have a stock ticker. There's nobody tracking their stock every single day. But the owners know what the value of their company is. And in many cases, they might be trading at a 10 times EBITA multiple.

So if you save half a million bucks every single year, it just added $5 million of value to your company. And so that was my first thought getting in this with the finance. background was like, I'm going to help these companies increase their profitability. And then when I started working with employers to do this, literally the very first client that I had, I just picked up, we call it Asian a record or brokerate record. So I picked up this client. It was a client of mine when I was in finance. They hired me immediately when I came in to the business because I was working with a reputable group. I didn't have much experience, but they bought the vision of,

hey, I want to help you fix this. And they got a 15% increase from their insurance carrier. I mean, I only been on the job for like 30 days. And we go out to meet with the employees and explain their benefits. And a single mother comes up to me at the end of that meeting and says, um, the only plan I can afford to buy is this $6,000 deductible HSA high deductible plan. And my son needs to have a procedure. And I don't have $6,000. What do I do? And she's got tears in her eyes at this point. Yeah, for sure. And I realized at that moment, my buddies were telling me, hey, they got a 15% increase in their premium. You just got a 15% raise.

You haven't even been on the job 30 days. You just got a raise. And my first thought was, I'm actually going to profit from this increase in premium. I literally walked into the owner's office and said, hey, just so you know, I get paid commission. And because your premium went up, so did my compensation. I want to get rid of the commission,

and I'm just going to charge you a flat fee. That way I'm disincentivized. I'm not incentivized by letting higher premiums happen. And so that was the first order. But then the second order was, okay, what can I actually do to affect the costs? And then that's how I kind of developed the practice that we have now, which I travel to country teaching other brokers how to do this. And it's a fast-growing segment of the industry.

But it's addressing what is the driver of health care? Is there a better way to get this and design it? So that the second order effect is as these companies are able to save money, they can provide more benefit to their employees. because I realize at the end of the day, it's the people. It's all about helping people. And it really related to me because I was already in the industry, been in the industry for a couple of years at this time,

that my brother had his health episode. And there was not anything that I could do to help him. One of the thought I had was, I mean, I could just get him a job with my client and he'd get his health care taken care of for free. But at the end of the day, my client's going to look at me. when my brother comes on the plan and is now racking up a bunch of bills.

Yeah. That creates that issue. It's a conflict. I know what's happening. So I can't help him in that way. Well, and it's a band-aid solution to your personal family problem where I think you're looking at this is more of a, I don't know,

not necessarily an antibiotic, but a potential other alternative approach to the status quo. 100%. So people are looking to the government to solve the problem when the answers, the solutions are already at their fingertips. And it goes back to what I just... The government's not great at solving problems. No, they're not.

But it really highlights what I described to you. We're subject to as employees, when we're picking a job, we'll ask about what kind of insurance do you have, what's the monthly cost. But we don't really understand, did the employer do a really good job setting this insurance plan up? Or did they not? And you don't necessarily know until you actually go to use the health insurance.

Is it good or not? Yeah. And so I view my mix. is to help people that don't have a voice and they don't have an understanding how the system works, is to design it in the right way. In fact, it's how I've designed our own benefits at our company. So, and not only do I teach other people and other employers how to do this, I do it for myself. I do it for our own company.

And it's an insider's view of how the system works, where it's misaligned, where it's, where it's broken, and piecing it together properly so that the employee has a good experience. They get what they need and they pay the right price. and the employer saves, the employee saves, everybody saves. So you go back and think about, and I mentioned this as a societal problem, if you take my brother, he's paying all this insurance premium,

he's paying all these out-of-pocket costs, how many times do you think he went out to dinner with his wife? Did he buy a car? Did he go on vacation? Did he buy furniture? Was he patronizing the local coffee shop? No, he was not. That money was.

was in a system profiting somewhere else. Had he worked for one of my clients, he'd have all that extra disposable income to do all those things that the American dream is built on. And it can spur economic growth in the local community. Because if you put money back in people's pockets, they're going to do what with it? They're going to spend it, probably. Only 99.99% of people. Right. There's a psychopath out there sleeping on a mattress full of money somewhere. Right. So I look at this from a couple of different angles, right? So it's, okay, hey, fixing a societal problem and helping spur economic growth. Those two things run hand in hand, in my opinion, in my experience, having done this now more than a decade.

What do you think would happen? Say that there is nothing changed about our current health insurance system or health care system. Ten more years down the road, what do you think it looks like? Because again, a six to ten percent increase in a hospital operating cost, that's a 100x increasing. cost on their side in 10 years. They're not just going to eat that. So that's going to start cascading downhill. I mean, what do you think it would look like?

Yeah. So one of the things I'm most encouraged about is the system that I've just described to you, that kind of that insurance programming, the ecosystem that we're building, that's quickly accelerating. You feel like traditional insurance companies hate you. Yeah, I'm probably not super. Not as a person, but they hate the fact. Maybe they do, some of them.

Potentially. I mean, you might want to have somebody else start your car for you at some point, but it's or started with you key fob from a distance because you're you're attacking you're attacking the middleman yeah and and the lever for margin yeah and i don't think they're going to like that yeah i don't think they do what's interesting is i have friends at work in those insurance companies because we still work with i mentioned united health yeah i mentioned signa you mentioned etna i mean i still work with those companies but i use them for what they're good at not where they're misaligned or a conflicted in where they profit.

Yeah. So if I was just showing my ID card, I have an Aetna logo on my own company card. We use Aetna. Yeah. But do I use CVS? No, I don't use CVS Caremark. Do I let them do the stop loss insurance for my plan? No, I don't.

We have a different way to manage that. We've built in other direct agreements where, I mean, I've had a, I've had multiple surgery. I've had a hip replacement. I've had a hernia fix. I had a colonoscopy. I've had a number of things. And I've paid zero dollars out of pocket.

to access all of that. Because I've built a system that if I want to make the choice to go to the right place that we have contracts with where I'm getting a fraction of the cost of what it would run through the Aetna network. So I can choose. I can go to the hospital and use my Aetna card. Or I have a network of providers that are willing to do it at a fraction of the price. They're also super high quality.

They're also in the Aetna network. But they've agreed to accept a lower cash price. If I go to them, it's completely free. So we work, that's the thing is employers, they want something that's recognizable. What do they recognize? United Health, Cigna, Aetna, Blue Cross. So we've got to work with them. And we have a ton of business with them.

But we're using them for their network. We're using them from what they're good at. Yeah, it sounds like to make, again, another non-precise analogy, you're at a buffet line and you're picking and choosing what you want as opposed to having to throw everything onto the plate. 100%. Like if you roll up to the gold and correct. No offense to Golden Corral, but I don't want to eat the sushi. There's some offense that should be taken by the Golden Corral.

If you eat the sushi there, which I haven't been into a Golden Corral. I have been into one. I think we're approaching three decades. I would like to go the rest of my life without going into one. If they do have sushi and you eat that, you are playing a Russian roulette. Right. Right. So to answer your question, what does this look like in 10 years if nothing happens?

I mentioned the solutions are out there. So there's independent, pass-through, pharmacy. benefit managers that are building out covered drugs based on cost and efficacy that will give 100% of the rebates back to the employers that will help them manage the cost they don't are they're not allowed to up charge for medications and profit from them that exists there's ways for employers to band together to buy health insurance at scale those things are growing at an exponential rate every single year and so and that's really driven because the current status quo system is unsustainable. Employers are looking at this problem and saying, if we end up going a few minutes

over, my team will kick off that other call. You know, employers are looking at this particular problem and realizing I can't continue to spend 10 to 15 to 20 percent over the every single year over the next 10 years. There's got to be a different way. And that's going to drive demand to actually solving the root cause of the problem, which is all. of the misaligned incentives. The way we contract with the insurance companies and let them manage everything. The other thing, there was a law that was passed,

the Consolidated Appropriations Act. And this was part of the COVID era legislation. And in it, it names employers as fiduciaries over their health plans. And so they've got to be good stewards because they're taking dollars out of employee paychecks that pay for health care. And you're seeing lawsuits happening right now.

Wells Fargo was sued. Johnson and Johnson was sued. there's been a number of high profile lawsuits where they're contracting with insurance companies that are managing everything and they're profiting off of medications. One of the examples was a medication that was run through a health plan that was $10,000 a month. And that same drug was available for a cash price through a different pharmacy for $88. And in what world does that make sense? There is no world where that makes sense.

That's right. None whatsoever. And so you have lawyers that look at that and say, well, the employees are paying. for that $10,000 a month medication. Because you're taking employee dollars that are going into this pool to buy insurance. They're taking that pool of money and paying for the claims.

You're overspending and you're allowing somebody to profiteer. It's racketeering, essentially. And you should be held accountable for that. And that's why they're being sued. And so as employers are realizing, wait a minute, I can be sued and not only can my company be sued,

but I can be personally named and have liability. Yeah, and you would be a way better steward of what you got going on. That's right. And so employers are now have more incentive to figure out. It used to be I'm going to go work with my golfing buddy who's going to broker the insurance and he's going to bring me one of the big names and we're all going to go play golf and slapbacks. And it is what it is. That's just how the system works. And I think you're going to see a lot more time and effort put into figuring out how to actually design these plans properly. And this is what I've seen. When I got into the business and I started doing this over a decade ago, I had a lot of people tell me,

this is a fool's errand. Like you're actually kind of dumb to think that you can solve. It's actually the people that got me to the business made fun of me. I got kind of mocked. Oh, there goes Chris, that guy that's going to fix health care. But I saw, I had an outsider's view and I had a vision for what could be done. And the common theme that I heard was if United Health Care and Blue Cross and Cigna haven't done it, what makes you think you can do it?

Yeah. And I just sit here and look, do you not understand how they make money? They have no incentive to solve the problem. It's going to take somebody, look, the taxi industry didn't fix itself. Uber did. Yeah. Use Kodak as a good example. They're the ones that invented digital technology.

Yeah. And then ignored its explosive growth. Ignored it, right? It's outside forces that come in and change the system. Yeah. And so that's the part that's most encouraging to me. To answer your question, what does the next 10 years look like? there's an army of people around the country in my industry that are figuring this out,

that are becoming awake to how to design these plans and how to do it right and they're educating employers. And platforms like this where an employer can hear a different perspective, if you're an employer and you're not hearing a different way to design a plan, you should seek out a second opinion. Or at least hearing that there is a different way to do something. Yeah. Well, if you hear there's nothing you can do, that's the biggest red flag. There's always something that you can do.

So it sounds like you guys specialize in working with businesses. What kind of choices does the individual have who's just going out to the market to get their own? Okay. So there's a couple of different things. The first is going to be the individual marketplace. The second are going to be medical sharing plans, which are technically not insurance. But you can align yourself with philosophically or religiously based organizations where they'll, provide medical coverage. The third, I would say, and I think this is really one of the most

important, is, and we talked about doctors. You mentioned you get six minutes with a doctor or visit. There are a lot of physicians that are moving out of what's called fee for service. Bad analogy, but think of it as like a car mechanic. When your car comes in, the more line items they can add to your invoice, the more they can bill. That's how traditional medicine is done. the more things they can code on the bill, they can submit to insurance, the more money they can make. Versus what are called direct primary care physician. These are physicians that don't take insurance. They work on a subscription basis.

So think of it's like Netflix for doctors. You're going to pay your monthly subscription fee. Maybe it's 50. Maybe it's $100 a month. And you get unlimited 24-hour access to these physicians. And that means it's no longer a six-minute visit. It is a 45-minute to an hour and a half visit. And if you need help on a Saturday, they're going to take your call.

And you've shifted the model from, how do I see as many patients as possible, just hurt them through like cattle every six minutes, to making sure this person is healthy, happy, because if you're not happy, you'll leave, they'll lose their subscription. And how do I keep them healthy enough where they're out of the office? And so you've changed the incentive, right? Show me a man's incentive. This is what Charlie Munger, Warren Buffett's right-hand man said.

show me a man's incentive and I'll show you the outcome. Yeah. And so you've changed it now to quality of care and taking care of the patient versus just getting them in and checking the box. Okay. I'm glad to hear that they have some options. How can people find you? Because I feel like, I mean, again, we're scratching the surface, but I want to be able to

point people in a direction where they can at least go down their rabbit hole and realize that there are options. Yeah, the best place to find me. it's kind of a central point to all the content that I create. So I share things on long-form content on YouTube, short-form content on TikTok. I also have a LinkedIn. TikTok? I know.

We're in our late 40s, sir. I know. I know. It's funny. The difference is in the audiences. Oh, for sure. Anything I post on TikTok is just a flame war. I'm like, do you realize I'm actually trying to fix the system?

I'm not part of what's broken? I mean, seriously, it's crazy. It's like drive by shootings, and it's always anonymous users. Of course. LinkedIn is probably the best platform for me because it's people are, it's tied to their professional name. It's like we know that it's Andy and there's your picture. Andy's the one commenting.

So you have a lot, there's the decorum is a lot better. The dialogue is better. But the best place to find me, the website's it's chrishamilton.com. Okay. And so there, I've got access to case studies, links to all my social. There's some video content there that they can find. I've got a playbook on our website that we use. It just kind of illustrates a lot of the concepts that we've talked about that an employer can take and really conceptualize the strategy.

I've also got a checklist. So if an employer is interested in interviewing other brokers or advisors, how to figure out, are you dealing with a good one? Or are you dealing with one that's going to show you more of the same? And so there's a series of questions that you can ask. And I've already teed up the answers that you should be looking for. somebody really should be able to explain kind of like guys I explained to you today what's broken in the system and then more importantly now that we know how the mousetraps designed what do you do to fix it yeah because there's always an option or what do you do to not get stuck in it yeah yeah hell yeah see perfect we'll get you on to your conference call perfect too easy thank you for making the uh the time to travel up here absolutely it's been my pleasure it's nice to meet you and have the conversation let's circle the wagons again next year and another year get another update okay yeah i'd love that cool all right man thank you