← Becker’s Healthcare Podcast
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- [00:00]
A
Hello everyone, this is Jacob Emerson with the Becker's Payer Issues podcast. Thrilled today to be joined by Alan Cohen, who's the co founder and chief product officer at Sentivo. Alan, thanks so much for taking the time to be with me on the podcast today.
- [00:14]
B
I'm happy to Jake. I'm very happy to be here today.
- [00:17]
A
Yeah. And before we dive into everything, we want to talk with you about actually a pretty specific topic and everything going on there. Can you tell us a little bit more about yourself, your background in health care and what it is that you do today at Sentivo?
- [00:29]
B
Sure. So I've had a pretty long at this point but varied career in kind of health coverage and healthcare. I started my career in working for health plans. I worked for three different health plans, some of the major health plans in this country at the time at least Prudential was the first one. Also Cigna and Massmutual. I then started one of the first Internet based employee benefits companies called Online Benefits where we were doing something that's really common now like doing enrollment and community communication all online and so people don't have to fill out paper forms. Well, actually the company I started was one of the first companies doing that. I ran that company for about 10 years and then I sold, we sold it to a public healthcare IT company named Adam Adam, a very well known company in kind of the healthcare information space. And then I began one of the first, actually the first benefits exchange company, this idea of giving employees money and letting them shop for benefits, which was a kind of a hotter idea for a while. That company is called Liaison. We were the first benefit exchange company that were really trying to kind of create competition among health plans competing for members. This is all pre aca. So the idea of these healthcare exchanges in part came from the work that we did. I also spent some time at Willis Towers Watson, the actuarial consulting firm. And then now going back five years ago, I was one of the founders of Centivo. We are a new health plan working exclusively with high performing, clinically integrated providers and accountable care organizations to really try to try to deliver cost effective, high quality healthcare to employers and their employees and members. Also by way of academic background, I have a MBA from Columbia University and London Business School and I also have an MPH from Johns Hopkins. And so pretty varied career in different parts of the health coverage world. But one thing that always seems, seems to be a recurring theme is healthcare inflation and trend. No matter where I go, it's something that we're always trying to talk. We're always talking about, and always talking about trying to figure out ways to kind of bend the trend curve and simultaneously help people have access to high quality health care that's not frankly, financially harm them or financially harm their employers.
- [03:01]
A
Sure, absolutely. Well, appreciate you giving us that rundown and let's dive right in and talk about some of the health care trends we're seeing right now. Certainly as we go into next year, some pretty unprecedented changes as we head into 2026 and what is looking like a pretty big increase for people all over the country when it comes to ACA coverage and premiums. Obviously, as you know, there's, there's a lot of limbo right now over the enhanced subsidies. There's worsening market morbidity that's really been dampening earnings for the big players in this market. And now we're seeing all over country the proposed rate filings with premium hikes. We've seen as high as over 50% in certain states, certain markets. But it seems that the average proposed increase right now is around 18%. So give us your perspective on this, Alan, given what you've seen, the history of this market, what's driving these increases and how should we be thinking about this right now?
- [03:56]
B
Yeah, I think the first thing is, look, these are shockingly high increases and this, you know, in this area, we've kind of in some ways gotten dull to the whip of, of, of rising inflation. But I think we have to realize that, you know, the, the, you know, rises in health care costs which then create rises in premium or changes in, you know, the, the pool of, of who is covered, which causes rises in premium. They, they just have to stop.
- [04:23]
C
Right.
- [04:23]
B
I mean, we're, you know, I feel like we've been talking about this. It looks me, I've been talking about this since I entered this industry in 1989, which is quite a long think it has been a, you know, kind of long, long path going off a cliff.
- [04:37]
C
Right.
- [04:37]
B
So we can't be kind of dull to these things. And, and I think this is, you know, a reemergence of, of health care and, and health coverage or premium inflation. And it's not, you know, it's not, you know, solely, you know, you know, segmented into the ACA markets. I think the ACA markets might be the kind of sharp end of the spear for a lot of reasons. But we're seeing this in employer coverage as well for insured employers. We're seeing it in employer coverage for self funded employers. And really it is a broad phenomenon that is occurring in all different aspects of health coverage. And it's one that we must attack. I mean, we can't go through kind of yet another cycle of double digit inflation because we've gotten to the point, point in, in our industry here that I mean, it has become unaffordable. Unaffordable for companies, unaffordable for people. I mean, you know, you know, the last, the last cycle of cost increases were mitigated by, by raising deductibles, right? I mean, you know, the deductibles used to have 500 deductibles, thousand dollar deductibles. They would only apply to, to, you know, to hospitalization, surgery. You know, now with, with high deductible health plans that are HSA qualified. I mean, people have 2,000, 3,000, 5,000, $6,000 deductibles, $10,000, $15,000 out of pocket maximums. I mean, these are individuals that have, you know, a few thousand dollars of in the bank and they have, and what has happened is they have become, you know, functionally uninsured. I mean, you are functionally uninsured when you can't afford your deductible and you can't afford your out of pocket maximum. And so we have, you know, in kind of the last cycle of healthcare costs increases, we were, you know, we mitigated that in the industry by just jacking up de to the moon.
- [06:35]
C
Right?
- [06:35]
B
And then hoping people would put money in HSAs, which you, some people did, but a lot of people, you can't put money in HSA if you don't have the money.
- [06:42]
C
Right?
- [06:43]
B
And so we don't have that escape valve anymore because our, the deductibles are as high as really they can be. They're, they're, they're getting close to, you know, ACA limits. And so, you know, it's really going to be very difficult for the entire industry. I say the industry, I mean, I mean healthcare providers, I mean insurance companies, I mean health plan administrators, I mean employers. It's going to be horrible for all of us if we don't find ways to mitigate these broad cost increases. And again, there's a whole series of reasons why. And Jacob, would you like me to go into some, you know, some reasons on why, why I think we're seeing these cost increases like you mentioned?
- [07:27]
A
Yeah, absolutely. I mean, give us some specifics on exactly what is driving this industry wide.
- [07:32]
B
Yeah, I think they, they fall into a few buckets, right? I think one bucket is just rising health Care costs and rising inflation.
- [07:40]
C
Right.
- [07:41]
B
I mean, we know that, that health care costs, the health care inflation, you know, historically has, has for decades and decades rose significantly above, you know, consumer price index.
- [07:53]
C
Right?
- [07:54]
B
But in, you know, last 10 years, it had been closer to the consumer price index than it had been, you know, previously. But, but we're going through another cycle now of simply higher cost inflation, right? So if we want to use the number of 15% or 18% for premium increases, like you mentioned, the ACA going up 18%, well, 8 to 10% of that. So 8 to 10 points of that is really due to just inflation in healthcare costs. And so, you know, some, some, you know, you know, there's some culprits in there, right? Drug costs are rising significantly faster than the medical expenses. You know, the advent of GLP1s has been kind of, you know, certainly a boon to, to people who, who are, who are overweight and have used them for weight loss and lose them to control diabetes and use them. But they're also quite expensive, right? And they have and they have. And unlike many, in fact, unlike almost all very expensive drugs that are segmented to a small part of the population, GLP1s, 30, 40, 50% of the American population could potentially be using GLP1s if they chose due to either diabetes or pre diabetes or obesity. And so that is certainly increasing costs as well. And so, so we have at its base as foundation, just, you know, an inflationary environment in health care costs. So health care cost, think about medical and prescription combined, right? That is higher than the past, right? We were kind of at a 4 to 6% health care inflation range and now we're at an 8 to 10% health care inflation range. But the premium cost increases that you talked about were significantly more than that because this is only one component of what's called premium or even medical trend. We call the trend which is different than inflation. A number of other things that are happening that, that the insurance companies are looking at and worried about are things like the enhanced, you know, the, the expiration of the enhanced premium tax credits. So the expiration of the enhanced premium tax credits, which essentially is going to make health insurance coverage less affordable, more expensive for a significant number of Americans, right? Because they're not get their enhanced premium tax credit anymore. And so, so their costs are going to go up. And we know what happens, especially in an environment where, remember at the beginning of the ACA there was man, you know, it was mandatory health coverage. Well, the mandatory health coverage has now been repealed Right. We don't have, you don't have to have insurance in this country.
- [10:53]
C
Right.
- [10:54]
B
And so if health care, if healthc care, you know, if, if the effective cost for health insurance goes up, right, then you're going to have more people who opt not to have health insurance on the, particularly on the individual market. And those people who opt to have, not have health insurance, you know, we know we've seen it historically, are going to be those people who are healthier and have less health care expenses. And so what that is going to do is it's going to worsen the risk pool. And so the risk pool will get worse because the, the people who are, you know, who have lower health care expenses will, will opt out of the pool because there's no longer a mandatory requirement to have health insurance. And that is going to kind of increase, increase costs for everyone who's remaining. And I, I saw the Kisey Family foundation estimate that, that, you know, they think about four points of the, of, of this, you know, let's call it 18% is, is likely due to, due to just that, due to the worsening of the health pool due to the expiration of premium tax credits. And then we have a number of other things that are going to make health care costs for again, the commercially insured. So people who get their, get coverage through their employer or get coverage individually, it'll make their costs more expensive. The most recent budget bill that was passed is going to reduce, reduce the number of people on Medicaid.
- [12:23]
C
Right.
- [12:23]
B
And, and people who are, who currently are on Medicaid, it's going to substantially reduce them. According to the, the Congressional Budget Office of cpo, those people are going to going to no longer have coverage that's going to create on more uncompensated care for healthcare providers. And when healthcare providers have a greater level of uncompensated care, well, they still have to keep the lights on.
- [12:43]
C
Right?
- [12:44]
B
They still have to pay for, you know, for all of their inputs in healthcare. They have to pay the salaries of all their healthcare providers to deliver that great healthcare that they do. And so they have to then shift the costs from this case kind of uncompensated care into the only place they can shift costs to, which is the commercial market.
- [13:04]
C
Right.
- [13:05]
B
You can't shift costs into Medicaid. Those rates are pretty much what they are. You can't shift cost to Medicare. CMS determines what those costs are, but those rates are. So you shift the cost to the commercially insured. Those are people who are insured. Through employers or insured, through their own. Their own individual insurance. And so that cost shifting is going to increase, increase costs as well. And that's the thing that, you know, the insurance companies are trying to predict what, you know, how much cost shifting is going to occur over the next, you know, year or so, you know, due to, due to that. And then I think another, you know, and then there's, you know, like, even, even maybe little in quotes, things like tariffs are going to increase input costs.
- [13:45]
C
Right.
- [13:45]
B
I mean, you know, the tariffs that are starting to come in now are going to increase the input costs for health care providers in a variety of ways. And then they, in turn, have to increase their costs above, let's say, a regular inflation rate in order to, you know, financially survive. So we have like four or five things all hitting us at the same time, which is the. Which is resulting in that, you know, like you said, maybe 15 to 20% increase, increase in premium, which is a combination of all these different things.
- [14:16]
A
But is it, is it a foregone conclusion at this point, Alan, that the enhanced subsidies will not be extended? I mean, what are you hearing? Both within the industry, among lawmakers? Is this where we should be operating from at this point?
- [14:29]
B
Yeah, I think the general consensus is that they will not be extended because the extension is just too expensive. Yeah, I mean, look, we. We just passed a budget bill that radically increased basis. Our. Our deficit.
- [14:43]
C
Right.
- [14:43]
B
According, again, not to me. It's not a political statement at all. Kind of the congressional. The cbo. The CBO scores all these things in a very, you know, nonpartisan, you know, mathematical way.
- [14:56]
C
Right.
- [14:57]
B
We are going to increase our deficit. And so I think anything, you know, after kind of the passing of the most recent budget bill, anything that's going to increase cost to our government, which doesn't have the money to pay it.
- [15:11]
C
Right.
- [15:12]
B
Increasing deficits mean very simply.
- [15:14]
C
Right.
- [15:15]
B
We don't have the money to pay for these things, so we're going to take out more debt.
- [15:18]
C
Right.
- [15:19]
B
I think it's going to be very hard to get anything passed that is going to significantly increase our federal deficit. So I would not bet that the enhanced premium tax credits will be extended because we're just not in a place right now in this country where it's going to be easy to increase government spending. Yeah.
- [15:43]
A
100. And you know, it's interesting, we've been seeing some industry analysis online from executives at Health Plan saying that just this year alone, these subsidies have cost over $130 billion in one year. And that's that is way over what the CBO had previously estimated, which is around 330 billion in a decade. So to your point, just an extreme amount of money that these subsidies are costing. So, okay, the subsidies aren't extended ultimate. What does that mean for the stability of the ACA market? What happens to, to this segment moving forward?
- [16:16]
B
Well, you know, unfortunately, we could see the ACA market get into, you know, a real death spiral, right? Which is. So again, the elimination of the PTCs again increases the effective.
- [16:30]
C
Right.
- [16:31]
B
Not the, the gross premium is, you know, let's say, let's just use simple numbers. Let's say an insurance company is charging $600 a month. That's gross, gross premium. But now let's imagine that an individual is getting a $200, you know, credit, right? So the effective premium for that individual is $400. But if that credit goes away now, the effective premium for that individual is $600. Well, this individual made a buying decision with four, with a $400 cost. Is that insurance worth the $400 cost right now? Now this individual is going to have to make a buying decision. Is that insurance worth the $600 cost? And, and we know, you know, know, look, this is, you know, there's, there's real elasticity in this market. As costs go up less, there's less people who purchase it, right? More people make the decision to say, you know what, I'm not going to buy health insurance. Again, you know, this, this all would be very different if we were still in a mandatory insurance environment, you know, you know, right after the passing of the aca. But since that has been repealed, we, we now, it is not a law that you need to have insurance. And so you'll have a segment of the population who opts not to have insurance. And I think there's good industry analysis on projections on what that segment of the population is. And it's significant, right? There's a significant number of people who opt not to have insurance. And what that will do is that will worsen the pool. And so what the insurance companies are trying to do now is predict what that pool is going to worsen to, right? Because what you have, again, let's just use simple numbers. And I'm not, I'm not claiming that these were, these is what, this is exactly what's going to happen. But let's say 10% of the people who are buying individual insurance now opt to not to have individual insurance because of the, of the, because the lack of the PTCs. We know that that that, that on average those people who opt out of insurance coverage are a significantly healthier population than the mean.
- [18:36]
C
Right.
- [18:37]
B
And so what you've done now is the remaining, in this case, 90 average healthcare expenses, you essentially worsened that pool.
- [18:47]
C
Right.
- [18:48]
B
And so now the premium need to cover those expenses is higher.
- [18:53]
C
Right.
- [18:53]
B
And what that'll create is another cycle of people who say, well, now that the price goes from $600 to $700 because it's a worse pool, well, that's a whole nother segment of people who will decide I don't need to have coverage.
- [19:06]
C
Right.
- [19:07]
B
And you can get into again what's called death spiral, where as the costs keep going up, you have less and less people opting for coverage. And every time you lose people, in this case you're losing people who are on the, on average. Again, not every one of them. There's always going to be someone you lose that all of a sudden has a medical expense. But on average you're losing, you're losing people who have lower health care expenses, which again worsens your pool, which causes you to increase your rates again. Right. So it could get into a death spiral where we're really seeing a smaller and smaller pool of people buying coverage. That, that is essentially a riskier and riskier pool with higher and higher premium rates.
- [19:49]
A
Absolutely. So you've got this smaller pool, you've got millions of people uninsured that were previously not. What does that mean for a company like Sentivo? Alan?
- [19:58]
B
So, so again at Centivo, and I think that what we do is really try to take a kind of different, a different path to say that if we can just keep doing the same we're doing in kind of health coverage, we're just going to be all running off this cliff.
- [20:15]
C
Right.
- [20:15]
B
And so what I think that every, you know, company has to think about, what every individual has to think about if they're purchasing individual insurance is how is your health coverage provider thinking about controlling costs this year, but also five years, 10 years down the line? And so what we do at Centivo is we rebuild plans that are called high performing. They're plans that will increase at a significantly lower. First of all, they save money right away and then they increase at a significantly lower rate than kind of, let's say, general regular insurance coverage.
- [20:54]
C
Right.
- [20:55]
B
Well, why? Because we work with providers who themselves are high performing. These accountable care organizations are clinically integrated and networks who've been designed to really kind of meet the aims of healthcare. You know, they're designed to improve the patient experience to Improve the health of the population, to reduce the total cost of care healthcare in the future and to reduce inequities of healthcare. And so we build our networks around high performing providers, organizations like you know, like Mount Sinai here in New York, like Orlando Health in, in Florida, like Bauer, Scott and White in Texas, like Immoral Care in California. These are organizations that are delivering high quality, cost effective healthcare. And we build our networks exclusively around them, really allowing them to be accountable for all the care in their geographic footprint. And then what we also do is we make sure that people that members, you know, think about, you know, we work with employers. So an employer has employees that become our members that become our healthcare partners, patients, but they're the same person, right? Here's an employee or a member and a patient. Well what these members do is they align themselves with high quality advanced primary care providers like patient centered medical homes that are part of these clinically integrated networks and ACOs that really can organize and coordinate their care throughout their kind of healthcare journey and really have an organization a again these are teams of people, primary care teams who are really thinking about the health of the population that they're managing, thinking about each of their patients journey providing patient centered, high quality, cost effective care. And they're going to help manage that healthcare through the person's lifetime. And we firmly believe, and we've seen now for over five years of experience that building networks with these great healthcare providers and making sure that every member has a, you know, patient centered medical home level, advanced primary care team that is patient centered and really kind of quarterbacking and coordinating their care. Not only does that significantly reduce cost right away, like right away, like next, next year, but more importantly it also improves the health of the population which reduces costs in the future. And again we work with, with employers. And so in it is people work for companies and their family members. We've seen hypertensive control go up significantly, diabetic control go up significantly, early cancer detection significantly increase. And all these things, they bend the curve. And so by making sure that the population of people are as healthy as they can be and really watching out for them, we could reduce the long term costs of healthcare by working with these wonderful healthcare providers that we partnered with. And what we do is we do what's called a value based contract with them where instead of getting paid for every little teeny unit of care, we really work a value based arrangement with them which is as they deliver greater value, they earn great rewards for that. And so it's really true because healthcare Transformation can't happen without healthcare health, without payment reform. And we're trying to, you know, with our healthcare partners kind of lead that payment reform to a pay for value approach as a pay for like each unit of care. But that only works if you're really working with these types of healthcare providers that have organized themselves in a way that they can deliver high value care and also really giving them that kind of control like we do by building our networks really exclusively around them. And so that's the way, you know, our approach to, you know, to fighting this problem of rising health care costs. And what I would say to, you know, to healthcare providers out there is to find organizations kind of like us that are, that are really trying to work with the healthcare providers to really to meet those aims, that we all have the same aims, right? We improve the patient experience, improve the population, the health, the health of the population, reduce the total cost of care and reduce inequities. We're all on the same side. So healthcare providers should find organizations like us to work with and employers should demand for their providers of health coverage that they have a real viable long term strategy to make sure that their employees and their family members can have access to high quality health care that is going to be affordable now and affordable in five years, 10 years and forever.
- [25:39]
A
Fantastic. Well, Alan, take one minute, talk to our audience, give us your last bits of advice, all the health plan leadership listening in from all over the country. Last parting words you want to share with them.
- [25:52]
B
I'd say we gotta change. I mean, you know, it's, we are and I know it, it kind of becomes an old saw. It's like, well, you know, healthcare costs are going up so much, at some point it's going to break, break, it's going to break. And so we need to change, you know, we, if, if we are unhappy with, with, with the cost of health care and maybe the unequal delivery of health care in this country, we need to look at ourselves in the mirror. And we're the ones in the industry and we're the ones who've created this and so we're the ones who need to change it. And so, you know, challenge the status quo, you know, work with healthcare, healthcare providers and, and, and you know, health or health plan administrators need to work together to solve this problem. And we cannot accept the status quo because the status quo has taken us right off a cliff.
- [26:45]
A
Alrighty. Good stuff. Alan, thank you very much for taking the time to be with me on the podcast, for sharing your insights with our audience. We really appreciate it.
- [26:53]
B
Thank you very much, Jacob. This was, this was really fun for me, too. And, and hopefully it was. It'll be very useful for all the listeners.
- [27:00]
A
Yeah, I definitely think so to our listeners. If you want to listen to more podcasts from Becker's Healthcare, you can visit Beckershospitalreview.com them.