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The State of School Employee Healthcare: Costs, Culture & the Road Ahead
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- [00:02]
A
You're listening to asbo international's school business insider. I'm your host, john brucato. Each week on School Business Insider, I sit down with school business officials and industry experts from around the world to share their stories and explore the topics that matter most to you. Find out what it means to be a school business official and get your insider pass on all things school business. Hi everyone, and welcome back to School Business Insider. In today's episode, we're diving into one of the most complex and consequential parts of school business management, healthcare and employee benefits. I'm joined today by Eric Gilbert, managing director at Daybright Financial and and Adam Henson, director of financial analytics and underwriting. Together, they bring both the strategic and data driven sides of healthcare into focus. We'll explore where healthcare costs are trending, what employees now expect from their benefits, and how school business officials can navigate these pressures while maintaining fiscal stability. From plan design to analytics, recruitment to retention, this conversation gets to the heart of what SBOs need to know about building benefit strategies that truly work. And Eric and Adam, welcome on. So good to see you guys today.
- [01:21]
B
Good to be seen. How are you, John?
- [01:23]
A
Doing well, doing well. Excited to bring you both in and talk all things healthcare. It should be pretty interesting. I was actually just getting out of a meeting with our health consortium today. We were setting rates, so that was always a fun conversation. So very timely for me.
- [01:38]
C
The busy time of year. Yeah, yeah, absolutely.
- [01:41]
A
Budgets are kicking off and I mean, healthcare is such a focus because, you know, Most budgets are 80% salaries and benefits. So this is very timely. That being said, why don't we just kind of start broad strokes? Eric or Adam, can you just give us a big picture? Like how would you describe the current state of healthcare for school districts in, you know, the current year and really what can we expect kind of moving forward in the near future?
- [02:03]
B
Sure, I think Adam might have a little more granular detail, but in general, health insurance continues to be on the rise. You know, the intensity of services, the, the onslaught of GLP1s. It's in pretty much every day's news about the percentage of usage of GLP1s, their perceived effectiveness, but all of that comes at a cost. So we're seeing 8 to 10% increases in average medical trend. But we around New York state as an example, we've seen increases in the 30 and 40% numbers, which is really challenging from a taxpayer standpoint in schools, private sector, small employers, obviously families of those who have children in districts, they're trying to figure it out, it's, it's going into 26. Probably one of the roughest years we've seen in nearly a decade.
- [02:54]
C
Yeah, I would just add on to that the, it's not just New York that's kind of feeling a lot of pressure right now. It's kind of all over the nation. One of the big things that's happening in 2030, all of the baby boomers will be over the age of 65. And that is a huge strain on the entire medical, you know, market, insurance, hospitals, everything, all the way down to the number of doctors that we have. So I believe that the next few years is really going to be that, that inflection point for our nation's healthcare systems. How we handle these new influx of aging population plus all of the, you know, the new procedures that are coming through from GLP1s as Eric mentioned, to genetic things, AI coming in. It's just, it's a really interesting time. But you know, they say like be cursed to live in interesting times. That's kind of where we are. Right.
- [03:54]
B
Adam brings up generations. You know, it's the first time that the baby boomers have dropped to a number of as far as percentage of workforce and now overrun by Gen Z and that the approach that Gen Zs have for buying insurance, using the healthcare system, the overall holistic health of an employer versus that of the baby boomer generation is very different. You're seeing for the first time in several years, pretty much any study, whether you look at MetLife or a Kaiser, a decline in overall well being. And that's, you know, that's employee focused surveys saying in general the workforce is not as happy and healthy as they were over the last four or five years. And a lot of that is to Adam's point is the boomers are finally aging out, which puts the burden on Medicare and retirement planning. But the inflection that we're seeing now is all of these young folks coming into the, the workforce and their needs and, and desires being very different than that of the traditional boomers.
- [05:03]
A
And, and so what kind of trends with those Gen zers, How is that changing in terms of how districts in plans are changing the, the cost and design for, for each year? I mean to your point, I'm, I'm, I'm seeing that influx of the Gen Z come into our district and I think the expectations in terms of what they're looking for from their employer is very different from the boomers. And just kind of, I go to my doctor, I get my checkup and that's it. There's more of, to your point, a holistic view, ancillary benefits. What are you seeing and how is that affecting plan design?
- [05:33]
B
It is exactly that. It's this, this variety of benefits. It's financial protection in general. So in the old, you know, the old mindset was give me good medical insurance, give me co pays. The boomer generation still pretty much is anchored to that. The millennials and Gen Zs have a much different focus. They're looking for balance in every direction from the amount of time they work where medical insurance used to be the primary driver for boomers and Gen Xers. You're seeing Gen Z's and Millennials looking for balanced benefits. They want more parental time off, they want different types of benefits offered, including the things like pet insurance that we all kind of giggle about. But these are real things. Candidly, elder care is becoming a topic of discussion. Can an employer or district provide some type of elder care support for what's becoming a very sandwich generation of a workforce? And we're living it ourselves personally, with parents and kids and grandkids. John, you've got kids now and you've got family all around and that's an expensive proposition to be out of work and to help care for them. So the Gen Z's come to work with a balanced brain and they're looking for balanced benefits. And it's not just co pays and medical insurance. So very different mindset. Big districts are lagging a little bit I think overall, especially in the United States, there's been a negotiated concept of very good medical insurance, which is certainly the right thing to do if you go back 10, 15 years. But Obamacare, the ACA created a lot of protections in health insurance that candidly were previously negotiated points that are no longer needed for negotiation. They're federal law. I think the focus now is to start looking toward different plan designs that accommodate this new workforce and hopefully offset some of the cost increases that we're seeing.
- [07:29]
C
These lifestyle spending benefit accounts are some that are really interesting because they're essentially a post tax account that employer can contribute to and from that you can go buy a hunting license or gym memberships, or pay for elder care or childcare or financial planning or caregiving so it be able to pepper all of the kind of benefits that all sorts of different generations are looking for at once. The Gen Z folks have come of age thinking about Google and Facebook as that's what every workplace should be and that's what I expect in my benefit packages. These sorts of Programs are what's available to kind of mimic those in a way. And another kind of differentiation between the generations is health literacy. To be honest, the baby winner generation, they are the most knowledgeable on what benefits are, what a deductible is, premiums, so on and so forth. Gen Zs less than one in four understand the three terms. Deductible, coinsurance, co pay. So you know, how do you talk about these plan designs to encourage Gen Z or millennials when they don't even know what necessarily we're looking at?
- [08:47]
A
Is there any conversation or any trends you're seeing in terms of with the baby boomers kind of phasing out of the workforce going into retirement and Gen Z kind of following them up? The desire and the look for from the Gen Z generation is very different in terms of that holistic lifesty. Are there trade offs in terms of okay, maybe they don't care so much about CO pay so we increase that, but we make better contributions to a lifestyle account. Are there cost savings potential there or is it they just want really good co pays, they want the really nice lifestyle accounts and everything in between, including my pet insurance.
- [09:20]
C
Well, sure, everybody wants the moon, right? So it's hard to come down from that. But no, I think you're absolutely right. I don't think that they have the same value in those co pays to the doctor's office visit. They want to know they're protected. If they get the sniffles, they break their arm. If these kind of things take place, they want to know that those are protection. But they really care about is their Great Dane that is, you know, sick and costing them money right now. They're healthy, they're young, they're not expensive, their cat is. So you know, there's a lot of things like that that are pushing what they find value in.
- [09:53]
A
And Adam, to kind of follow up on that, where are you seeing kind of the biggest spending areas? I mean we talked a little bit about where the desires are, but where is the money really being driven? I mean I can just think in terms of our own ecosystem here in my consortium. Eric, you had mentioned it. The GLP1s are just through the roof and that seems to be all we're talking about these days. Are you seeing prescription drugs really kind of in pharmaceutical really driving the cost? Is it hospital visits, medical visits, where's the money going?
- [10:22]
C
Yeah, that's a great question. So in 2025, I would say first that insurers mispredicted, if that's a word, the utilization rate for surgeries. They anticipated much lower rate. There were some things that happened in the world here to where some of the insurance carriers were a little afraid to keep up high denial rates after the assassination of the UHC president that had an inflationary effect. Because denials decreased, more surgeries took place. And so now we're looking at a place to where these insurance companies are trying to make up for the lost costs that they had this year from these sorts of things. So we're looking at a huge increases just to make up for differences in denial rates. But pbm, another big piece. You'll see a lot of things happening right now with like Kamar Cuban's Cost plus driving a lot of disruption into the PBM space. I think that there is a lot of, there's ease of doing something there. It's an easy apple to pick, but it might not be the biggest cost savings piece that you could find. But the, the big thing is chronic disease. Chronic disease. Chronic disease. When you talk about your health care spend, 1% of the population accounts for 24% of your plan spend. The top 5% of your population accounts for half of your plan spend. So if you're not attacking diabetes, high blood pressure, cholesterol and attacking those in better ways than we've done in the past, then you're not really impacting or moving the needle at all.
- [12:11]
A
Right.
- [12:11]
B
It's a great point. And John, I know in the New York space or even across the country, whether you're in a consortium or a state based plan like NYSHIP in New York, data is very limited. So from a district perspective to really take a hold of your population and try to manage those chronic conditions through the use of, you know, other sources, you know, population health management, you know, nutritional programming, those types of things, it's really challenging for districts that don't have access to their data to be able to truly bend the trend or make an impact. So GLP becomes the conversation because you might as well. Everyone else is talking about it must be going on in our district too. Knowing the details allows you to at least, you know, take a run at trying to mitigate that 1% or that 5% of the population because it really is impacting small numbers of employees and their families and getting them on a better path. Episode of care and that could take hundreds of thousands, if not millions of dollars out of a district's annual spend for medical and pharmacy. It's big. And I think the biggest gap we're seeing as a consultant to so many school districts is the lack of data, the access to data.
- [13:29]
A
When it comes to kind of trying to mitigate those costs, those theoretically preventable lifestyle kind of diseases. Are you finding more districts and health plans implementing kind of telemedicine and more low cost rather than having to go to the doctor, you can pull up a phone, pull up an app like an MSK solution or something like that. Are you seeing that trend as well to kind of mitigate these, these costs every year?
- [13:54]
B
I'll let Adam go. The general response to that is a lot of those things are kind of picking up the pennies and nickels along the way, the telemedicine and, you know, altering an episode of care from an emergency room to an urgent care facility. All great and definitely impactful for, let's call it the 85% of the population, it's getting the diabetic to get on a better course of treatment and making sure that they're doing as much prevention as possible. It's taking a comorbid somebody with COPD and has obesity and really trying to manage that particular member through their episode of life. And that's hard to do if you can't identify them. But yes, that programming is out there. But to not know who you're targeting and to just lay over an MSK program or a disease management program and hope spraying it out to a thousand plus members is going to work, I think that's asking for more spend with not really understanding if you're going to see the result again. That's where the data comes back into play.
- [14:57]
A
And this is somewhat anecdotal and somewhat data driven, but I think it too relates to who's using it. I mean, I think it may be like an MSK program, you know, layering that on top of your. Or telemedicine, layering that on top of your plan. Maybe a younger generation thing that's like, oh, I can pick my phone up and get exactly what I need. Where exactly like a baby boomer is not going to. I'll just go to my doctor. I may not even go to urgent care. I'll just go to my physician. So has that been a challenge too? Just generationally trying to square that circle with trying to save those dimes and nickels along the way.
- [15:31]
C
Oh, even when it comes down to just how to communicate the benefits to employees, that challenge is there. You've got baby boomers want the printed booklet. Gen Z wants a flipbook or an app or whatever it is. Right. So even down to just how it's communicated, different desires so Eric, you work.
- [15:50]
A
Very closely with school districts, other health plans. We talked a little bit about the changing expectations of the generations coming into the workforce. But can you kind of tell me a little bit more about how employee expectations are changing? It may be cross generationally, but what, what are employees really looking for from their employer when they're searching for a job? Or maybe they're looking to negotiate better benefits?
- [16:12]
B
That's a good question. The, you know, the table stakes for most employers and any, you know, any survey would show you this. If you get, you know, you look at medical, dental, vision disability insurance, they all rank as, you know, 80 to 90% employees desire. But it's that next level of benefits that really go beyond employee insurances. It is paid time off, it is, you know, childcare. It's the things that are become kind of the soft benefits, it's behavioral health, mental health support. Those things are really becoming highly desired. I would say for us it is seeing options in health insurance though to stay on that health insurance idea to walk into a school district in, we'll take New York State or Pennsylvania. Generally there's one plan offered and it's you as an employer paying 20ish percent of that plan, whether it be a single or a family. And for to Adam's point, for a gen Z who's 27 years old, fairly healthy, they're more worried about how much it's going to cost to keep their dog healthy. And they're sitting there forking out, you know, 20% of a very expensive insurance plan. That to me is over insuring the individual. But that premium has to be paid both by the district and by the employees. So I think change in the way the plan designs are offered to employees, especially in the public sector, is it's going to have to happen. So just from a sheer cost standpoint, but more from an options for the generational shift that's happening especially in school.
- [17:53]
A
Districts, I was going to say, I mean traditionally you have single plan, family plan, maybe you know, single plus one or something like that. So you're saying that school districts are now probably going to have to look at something a little bit more creative, a little bit more granular to find those cost savings.
- [18:11]
B
Yeah, I would say, you know, there's two. It's a double edged sword. You start talking about high deductible health plans and now you're talking about collecting premium as an overall health plan. Are you getting enough in? But if done right, and let's use health savings accounts as an example, there's a lot of misunderstanding on how dollars can be saved from an employee perspective. You know, the old FSAs and HRAs where the money is there but it can be pulled back by the employer health savings account are unbelievable. They're triple tax advantaged. If done right, you can save hundreds of thousands of dollars into your retirement. Use those dollars for paying off Medicare premiums, medical expenses into retirement. And if you coordinate that with a high deductible plan, it's a qualified plan by the irs, it's a lower cost premium. You're giving the employee a choice they have an opportunity to, if they're relatively healthy, not have to overinsure themselves and use those surplus dollars and donate those to themselves in a health savings account. To me, those are strategies that we're talking through with districts that are really trying to break their current paradigm of these co pay platinum level plans that have been in place for so many years.
- [19:25]
A
Today's episode is brought to you by Daybright Financial, one of the nation's largest independent privately held firms for benefits and retirement planning. Serving nearly half of US schools. As a proud strategic partner of Asbo International and the chosen third party administrator for Asbo's 403 model plan, Daybright takes the stress out of managing benefits and retirement plans. From 403 and 457 plan administration and employee benefits to compliance, recordkeeping, customer service and enrollment. They handle it all so school leaders can focus on what matters most, supporting students and staff. With Daybright, it's just that simple. Learn more@daybright.com and are you finding that to be a challenge just in terms of making that happen? Just I mean you and I know well enough where it can be tough this collective bargaining agreements and unions and you can't just make sweeping changes without getting to the table and talking about it. Has that been slowing the progression towards a more modernized plan design?
- [20:24]
B
Yeah, I'll let Adam go into a little bit of the detail here, but in general, again, if you take data out of it. So if you look at a school district that's part of a consortium or part of a state managed plan, it doesn't, you know, allow granular data down to the district level, it's really hard for a consultant or the district to just kind of jump off the cliff and make a change and just try it and see how it goes. Introducing slice medical plans, you know, a high deductible plan that sits next to kind of their base plan has been kind of the the slow growing grassroots effort to at least introduce New concepts to very traditional school mindset that has been somewhat successful. But then you get into the true how do you actually, how do you contribute it from an employer standpoint and an employee standpoint? Adam and I run into this all the time where you have a copay plan and you have a high deductible plan. And by the way, the time they get done with their contributions actuarially and cost wise, they're pretty much the same amount of money from the district plan perspective or from the employee perspective. So you've taken a platinum level plan and a bronze plan and the way that you've built contributions, you've made them end up being pretty much even from a budget and coverage standpoint. So why bother? So there needs to be a lot of time spent managing the risk, but also building out the contributions and how the plan should be built from what the employees contributions are.
- [21:51]
C
If I had a crystal ball that said what the problems were going to be in the next few years and, and how that would help attract employees, I think it is access to doctors. We've got a huge population, a huge deficit of doctors in the population right now. Something like a half a million doctors are needed. We've got the baby boomers aging. Of course, these districts that have done things like putting on site clinics in place or direct primary care organizations or something like that, that is increasing the ability for an employee to go to a doctor. I think that's going to be a differentiator in the future because you're going to have. Well, I could, if I go to this district, I've got access to urgent care right there on site. If I'm working at this other district, I've got to use the state plan and oh, it takes a month to get into the doctor or whatever it might be. So I see that as a, as a growing concern in the future.
- [22:49]
A
Yeah, it was kind of funny. I mean, in an ironic way. But as I talk to guests on this podcast, a reoccurring theme when it comes to the workforce is that there's a shortage of teachers, there's a shortage of bus drivers, there's a shortage of business officials. Now I'm here. There's a shortage of doctors. What's everybody doing?
- [23:09]
C
What's going on?
- [23:11]
A
There's like less people in the, in the population. It just, it's crazy to me that there just seems to be a shortage in all of these professional white collar, not even white collar jobs, just across the board. I guess this is kind of a different question for a Different audience. But are you seeing like, are you having the same experience in, in your circles or is it just less qualified people to do the work?
- [23:33]
C
Well, I'd say with like, as far as like doctors are concerned, I see that being, you know, it's kind of, it's two things happening. Number one, there's barriers to being coming a doctor. Right. Lots of student debt, lots of things like that. But also we are developing our medicine at such a rate where we're able to do so much many cooler things now and more tests and more surgeries. And that in and of itself creates a demand for more doctors, that even just the natural flow of progression creates this deficit. So it's kind of a two part hidden on both sides now. I imagine that's the same sort of thing as bus drivers and other things around the world as well, or a country.
- [24:16]
B
Yeah, and I would say the, the amount of people accessing care. I mean you're, you're post 65, your Medicare population, they're living much longer now and they're living healthier lives. They've, you know, they've kind of maybe figured out a little bit of the magic. So you know, what, what used to be 70 turned into 75 turned into 80. And now it's not unusual to have, you know, 80 to 85 year old, you know, people out in the everyday life of, you know, taking walks and playing golf and they have access to services, they're keeping themselves healthier and then enter in all the, the gen zers and, and the millennials, which millennials were what, 85 million strong? There's just a lot of people trying to knock on the doctor's door. And it's worth noting that, you know, you think about the, the millennials and the Gen Z's, they're on mom and dad's insurance typically until they're 26. They age off, they go to college. You know, you look at the percentage that have the graduation rates, primary care physicians and the attachment to these gen zers is very low. So you think about how few especially young men come out of, you know, their mom and dad's insurance or come out of college and get a job. They don't have a primary care physician, so they're not navigating care. They're not doing, you know, an annual or, you know, every two year physical. Chances are, you know, they're, they're using urgent care when they need it. That is not a good start to their journey of using healthcare. So I think ad, spot on. I think that the access points are going to become critically important. I think concierge medicine is going to become a much bigger conversation. Private medicine, if it can be afforded, will become part of the regular narrative. When we talk about health insurance, whether it be for executives and leadership or do small employers start to put that in play in lieu of traditional health insurance?
- [26:07]
A
You know, I will admit as a millennial, it took me three years to find a new primary care physician. When I moved away from the Buffalo area. I was already off my parents plan so I can defend myself there. But you're right, I just get my.
- [26:19]
B
Speaker room experience by now. 26 year old, went to Charleston for four years and came back and never had a doctor during that entire time, but hit the urgent care probably three or four times a year.
- [26:30]
C
Yeah.
- [26:30]
A
But I, I'm proud to say I finally found one after three years. So I'm wonderful.
- [26:35]
B
As a father of two, you need to have.
- [26:37]
A
I know, I know. Times have changed. Adam, I want to go back to one thing you had mentioned about just kind of the advancement of the technology of medicine and just care. Do you see that long term as, as, as a cost saver or maybe a cost driver? Because I'm wondering, are these advancements just better at treating the symptoms rather than treating the root cause, or are they actually doing something where it's actually helping patients cure the disease or whatever what ails them? I mean, is it, is it dulling the symptoms or are we actually seeing some long term benefits?
- [27:11]
C
That's a, that's a, that's really good. The cynic in me says there's not a lot of money in pharmaceuticals curing diseases. Right?
- [27:21]
A
Yeah.
- [27:22]
C
They make money by selling prescriptions and they need you on those prescriptions. So that's acidic in me. But I would say with a lot of the technology advances that we're having, I think they are having a short term inflationary effect while we figure them out and we overuse them. AI is a really great example into this, into medicine. I think it's going to have its absolute amazing uses, but right now we're just scattershooting it on everything that, that's causing more cost than it is producing in savings. GLP1s is a good example too. Yeah, they've been around now for a good number of years. We've seen real world studies of these now over the past few years and that means that they're all able to take their real world examples of GLP1 utilization and apply it to a new disease state. And now we can sell even more of these prescriptions. Maybe the whole cost of the prescriptions come down. But if we can sell more for more disease states, we can make more money. So I see that as happening too. And in fact, Eli Lilly just had their stock price just took a hit just the other day because a study came out that showed there was no correlation between GLP1 utilization and any benefits to Alzheimer's patients. But they were really expecting there to be. The market did it anyway because they thought it was going to be this miracle drug that could be applied to anything. Eli Lilly said, no, it doesn't work. There's lots of other things that might work for. But this it doesn't. And their stock price took a hit for it.
- [29:03]
A
Are you seeing health plans really take a different stance than GLP1s? I just today, as I had mentioned before, we were setting rates. Another consortium in our area, I found out, just restricts GLP1s strictly for weight loss. Are you finding that plans are now adjusting how they're allowing these GLP1s to be utilized on plan?
- [29:25]
C
Absolutely. Every single plan is either having this conversation or should be having this conversation on whether or not they as a firm want to cover them for weight loss or not for diabetes. Yes, they need to be covered. Access needs to be high for them that you need to have them. They do great things for weight loss. They work. Assuming that you continue on them forever or you have a very different lifestyle change and all these sorts of things. I find myself having the same conversation of 10 years ago on bariatric and weight loss surgeries as I do now for GLP1s. So yes, they could be impactful. You could see savings if all of a sudden everyone in your company lost weight, everyone in the school lost weight, you'd be in a really, really good spot. But it just, it's not permanent. Much like the bariatric surgeries weren't either.
- [30:22]
A
Right. Because it really necessitates a lifestyle change. It's dulling kind of impulses almost. But as soon as you're off of it, you're kind of back to where you were mentally, maybe whatever those, those circumstances may be. Is there any data to suggest that in the, in the short term there's been some cost savings with significant weight loss and maybe increase cardiovascular health and things like that. What have you seen that around that.
- [30:46]
C
Haven'T seen enough yet to show some of those savings? Those, some of those are going to take a little bit longer to see kind of come true or not. But certainly the you Know, you, we have proofs of like every 10 pounds that you lose, like drops your morbidity rates by, you know, some huge percentage. So certainly there's something happening there. Just not enough data yet to determine one way or the other.
- [31:12]
A
So how can school business officials use benefit design strategically to kind of attract and retain employees? We talked about what you're seeing in the market. Are these the strategies that school business officials should really be considering now and modifying their plans to resonate with Gen Z a little bit more? How do you stay competitive when it comes from a benefit standpoint?
- [31:32]
C
Let me say one thing to that. So you could, I think about the value proposition of the employee, right? And if we stratify employees into risk categories, right? So if the top 1%'s costing 24% of your plan spend, top 5% is 50% of your plan spend, that means the other bottom 50% are only 3% of your plan spend, right? So if I'm talking about my value proposition, I want to build a plan design that is so overwhelmingly attractive to that bottom 50% that costs me nothing. You know, they're probably paying more in premium than they are in any cost. I want to do everything I can to encourage those population. And on the other side, that 1%, that's very, very high cost, I want to make sure that my plan is not having them hyper select my plan versus, you know, the marketplace or a spouse's plan or something else. I better not be doing anything that encourages those 1% to come on because otherwise I'll be doubling or tripling my cost.
- [32:34]
A
From a, from a data and analysis standpoint, how can school districts and business officials use data itself and underwriting insights to really kind of predict and manage rising costs? I mean, it's, it's a lot. There's actuarial experts for a reason. But where does the school business official in the district come in to kind of parse that data with the export to kind of then correlate that into real world cost management, right?
- [32:58]
C
Because if you're just looking at data without any sort of insights, it's just regurgitation, right? It's just, this is, I'm just throwing up at you. You've got to have actionable insights to those data. So, you know, big piece of that is disease states and cancer and chronic disease members. What are you doing to attack those populations, to give them interventions into their actual disease state? That's what you need to focus on and that's how you can even laser focus into seeing what your plan Looks like. But I'd also focus just on the demographics of those that are electing your plan and those that are not electing your plan. Because those that are not electing your plan are telling you, hey, it's not worth it for me. Maybe that you want them on the plan, maybe you don't want them on the plan. So you've got to think about those things.
- [33:51]
B
And I think from a recruitment standpoint, there's enough data publicly available to suggest who you're hiring. You know, you're pulling in Z's and millennials, especially Z's. I mean, they're coming out of global pandemic. Their first workforce experience might have been remote. There's a lot of social and mental well being discussions being had inside that generation. You know, how do you socialize them, how do you bring them into the workforce? They will use, you know, telehealth in every aspect from behavioral health to psych. They're comfortable using their phones to navigate care. So, you know, Adam's earlier point, you know, you have baby boomers that you're hiring, you're going to have booklets of information and enrollment forms. But when you're hiring, the Z's and the millennials, they want flip books, they want AI driven decision support. They would really want to have an experience that says, hey, we care about you, the employee. It's cultural to some degree, which is from a consulting standpoint. We spend a lot of time with districts on the employee engagement side. You might already have great benefits, but they're not being communicated very well. And so how do you really help the district or inside a union, specifically take a teacher's union and communicate into new hires and through open enrollment. How do you really engage employees? Let them know what the district provides and how to access those benefits that best serves them themselves and their families. And I think there's a huge communication gap that's happening, especially in the public sector. It's really, I think there's a perception and you know, we've talked about this a couple times, John, in the past, where what the district thinks they're doing would be, you know, great benefits. They should be, you know, employees would be lucky to be here. The employee's perspective is just the opposite. They're like, I don't, I don't see great benefits here at all. I might be able to get it down the street or maybe change. Industries go from public sector teaching into private sector white collar business, where it is a Google or an Apple atmosphere, where you come to work when you want and there's food pods everywhere and it's just a whole different experience. So I think districts, especially school districts, are in a moment where they can drive change, not necessarily all the time on the benefits themselves, but how you communicate to your employees and engage them in making better decisions.
- [36:16]
A
Sure. You know, Adam, to your earlier point of staying laser focused, it kind of triggered something in my mind. Speaking of lasers, are you seeing any kind of like increase in stop loss in reinsurance? Is that driving costs as well?
- [36:28]
B
That was a heck of a segue, Josh.
- [36:30]
C
Yeah, right. That was good.
- [36:31]
A
Well, as soon as you said laser. Because I remember when we were in a self insured plan that the stop loss lasered somebody off of the. Yeah, absolutely. That's a callback from many years ago.
- [36:41]
C
Stock market stop loss insurance this year has been just enormous. The large claim trend versus kind of that middle claim, small claim trend has been through the roof. So these stop loss insurers are doing everything they can to adjust that. That means lasers. That means other things. I had a renewal here just the other day with a carrier who traditionally does not ever provide lasers. They have the right to and they did. You know, for the first time that we've almost ever seen other carriers, that's kind of always their M.O. they laser. They're not. But you're just seeing a tightening of screws across everywhere right now, lasers being one.
- [37:30]
A
Well, Adam, I know you appreciated the segue. I don't know what Eric's problem is.
- [37:33]
C
It was great.
- [37:36]
B
I was wondering where you're going. I was thinking laser surgeries or something.
- [37:40]
A
What is he going to say? Yeah, for those listening, it's. It's late in the afternoon for all three of us, so we're doing our best. So just really a gun around trying to be innovative in terms of being able to offer employees what they're looking for while also maintaining and protecting the financial health of school districts. Are you seeing any kind of innovative, innovative approaches out in the wild? I mean, you know, we're in a consortium. We have a bunch of school districts that decided to get together and pool their resources and their experience. And it has proven incredibly beneficial. Some districts are self funded. There's hybrid models, incentive based wellness. What's going on out there? What's, what's innovation look like in the healthcare space?
- [38:21]
C
I would say in order to produce savings, you have to have intervention in some way. You have to be able to change something. You have to be able to do something. And so some school districts are locked in such a union Environment to where they can't change anything, Nothing could be changed. If that's the case, I don't think there's any consortium or self funding or anything that's going to do you much good. You should probably leave all of that risk on the state and stay in that plan. If you do have some levers to move, then yeah. Either being on your own, if you're large enough and really controlling everything, or splitting that risk among kind of a small pool of like minded school districts. As long as everybody in your pool or consortium is willing to impact claims, is willing to do things to address it, then I think you're in a good spot. If you're just sitting there and hoping and wishing and dreaming that it's going to do something, it won't make an impact.
- [39:24]
B
Yeah, yeah, I agree with that. I also think the modernization of benefits will have a trickle effect. It's definitely already happened in the private sector. I would say 90% of our private sector clients have some type of hybrid or high deductible plan. Health savings accounts versus the traditional HRAs are very prevalent. As you think about financial protection, planning for retirement, the 401k or in a school district, 403 coupled with a health savings account, is it mind blowing innovation? No, but it is definitely a next step or an evolution to what is considered traditional health care in school districts. I also think the voluntary benefits that no impact to the district from a cost perspective, but additional protections to the employee, whether it be accident plans or cancer plans, hospital indemnity plans. If you, if you listen to, you know, what we've been talking about today, it's a small percentage of people that drive big costs. And so those are the inpatient stage, those are the people that have a critical illness or cancer. So if you can protect yourselves, you know, financially with those voluntary products, at that point it opens up the conversation that a deductible is okay. Because if you couple that or marry that with a cancer plan or a hospital indemnity plan, that extra plan pays for the deductible that you might have. So there's again, this is conceptual, it's educational. And to Adam's earlier point, which I think is the one point that if you take away anything, you're talking to a generation of people that don't understand health care or health insurance very well. And so to introduce innovative concepts will fail immediately if communication doesn't come along for the ride. It's just it, it, you could have the best idea in the world, but not being able to execute it in your future workforce is, you know, that that'll be the unfortunate piece of not communicated well.
- [41:22]
A
So I have to ask why is it that there's such a lack of understanding? Is it because healthcare by nature is just complex? Is there a lack of interest in health and benefits in terms of understanding the nuts and bolts behind it? What is the reason, if there is one, why there seems to be so much confusion around healthcare and benefits?
- [41:40]
C
It's complicated, it's opaque. You have no idea what actual costs are until you go and you get back and you get some letter and then oh yeah, don't pay the first letter, pay the second letter. There's just so many little rules that just are so overwhelming that most just shut down and don't bother learning it unless they are in the system because they are unhealthy, because they have to learn it. Because the only people that know how the system works are the ones that are navigating it every day.
- [42:11]
B
If you think about every insurance product that is put into the market is delivered via what's called an spc, a summary of benefits and coverage. That document is eight pages long. It's a federal template of how benefits are described to the employee or the members. And most people look at the first two or three things. Oh, it has $20 co pays for doctors and it has $5 generics and you know, $70, you know, tier three drugs. Well, then they go to the hospital and they realize there's $1,000 inpatient co pay that they never read on page five. They get the bill and they freak out because they've been paying for this incredible health insurance. But they didn't really. There's so many details and a benefit structure that it is really hard for the aver access care regularly to understand. If you don't use it, you lose it. From a, from an understanding standpoint, managing deductibles and coinsurance and out of pocket maximums, I mean that's math and that's math. Understanding how the bill shows up and everything else, it is very complicated for sure.
- [43:17]
A
Well, you really want your head to spin, have a baby and read the explanation of benefits summary.
- [43:23]
B
We didn't even touch on the eobs.
- [43:26]
A
Because I'm telling you, we got that in the mail and I was like, I don't consider myself a complete idiot, but I was going through it and here's what it would have cost, here's what the plan covered, here's what the anesthesiologist charged. Like you think Just as a, as a person you're going to the hospital is going to be one bill. But there's all these subcomponents and these calculations and even for me, that is someone who works with numbers and complex data on a semi regular basis. I'm like, this is wild. So I can't imagine just the average Joe trying to dissect and understand these EOBs and just trying to, you know, have a baby. What you think would just be what everybody may want to do in life, you know.
- [44:03]
C
Right, Absolutely. And you've got, I think we have to be really careful too when we talk about, okay, well you know, baby boomers like hands on help and concierge and you know, really, really in depth health. But Gen Z, they want an app and they just want to, you know, read it somewhere. That's not necessarily true when they really, really need the help. I think your TPA, your medical TPA, being able to walk people through those benefits, those EOBs, helping them understand, maybe it's a TPA, maybe it's a quarterback in some way that's sitting on top of your plan, providing this sort of concierge type benefit. I think that's huge because then people become educated. When people come become educated, they go to the doctor. When they go to the doctor, they get on their high blood pressure medication. When they get on their high blood pressure medication, they generally don't turn into a heart attack. And now you've saved a hundred thousand dollars, you know. Right?
- [44:56]
A
Yeah. I just think the whole thing is confusing. And this is the last of my ranch. I remember when we had my son, we were still getting bills in the mail and we have great insurance, but we were still getting bills in the mail like six, eight months after he was born. It's just, it's like we, it's like we forgot about all that and all of a sudden the bill shows up like, oh, by the way, you still owe $600 for this thing. It's like, it's just crazy.
- [45:20]
B
No, the system stuff. And you know, to Adam's point, that that concierge overlay, you know, in, I would say most insurance carriers and or TPAs are pretty good. From a 1, 800 number, if you have a question, you can ask it. But John, as you know, you know, from a, from a consultancy standpoint, from our engagement, the way that we try to engage districts, we do offer that advocacy. So if there's a complex bill that shows up in the mail and the employee's struggling with it, we want Them to call us, you know, if they're, if they're part of the districts that we take care of, it is a huge relief. And to see the appreciation via email response saying, hey, thank you so much for helping navigate this. It shows you that there is definitely a gap in knowledge when it comes to accessing care, paying for care, but that trickles back into the. Once a year when you make a decision to buy benefits and it's going to come out of your paycheck for the year, how little do they really know? And if they don't know it, they're going to buy the best possible perceived value, you know, make sure my family's covered. And they're probably overspending and overinsurance. So again, it goes back to, I think good benefits with great education is probably a first step for most districts as far as taking the next step.
- [46:35]
A
Right. So as we wind down here, what would be your final word of advice to school business officials as they prepare for the next round of healthcare negotiations or renewals or just really getting the budget together in general?
- [46:47]
C
I'd say as far as negotiations go, Flexibility. Flexibility, flexibility. If you are prescribed into the exact deductible and carrier and out of pocket and premium and all of those sorts of things for coverage, you've got no levers to, you know, impact or change anything. So you have to build in reasonable guidelines and flexibility standards into your collective bargaining agreements so you can make reasonable changes go forward to impact those budgets.
- [47:21]
B
Yeah, I'd agree. I think flexibility has been a constant theme in our conversations. We're not trying to the district, nor us as a consultant, we're not trying to take benefits away. We're trying to ensure families at the right level of insurance. And to do that, I think you have to be flexible. The old traditional copay based plans that are super expensive to the district and to the employees, they have a place, but not for everyone. And I think there's some alternatives that are out there. I'd also suggest just in advocacy from the districts, whether it be to their consortiums or to their state, is data transparency the ability to access their data to really make an impact on their district. You know, they are owing taxpayers answers to why health insurance goes up at double digits every year. And just saying that we're in a consortium or we're doing the best we can, that's not going to fly for many more years. There's only so many dollars you can ask taxpayers to come up with before they start knocking on the door saying show us why this is going so badly. So I think data transparency has got to be a big topic of conversation, not necessarily to the unions or to the constituents using the plans, but up the chain a little bit.
- [48:37]
C
Great.
- [48:38]
A
Well, thank you both so much for joining me today on School Business Insider. It's been an insightful conversation, and I wish all the luck to those putting their healthcare budgets up for next year. Thanks so much.
- [48:49]
B
Agreed. Yeah. Thanks, John. Appreciate your time.
- [48:54]
A
Thank you for tuning in to School Business Insider. Make sure to check back each week for your favorite topics on school business.