Reinventing the Health Insurance Business / HealthChoice

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we're going to take a little tour of what's going on in healthcare not just healthcare insurance industry and I'll give you a perspective that you probably wouldn't expect to get from a health insurance executive but as Peter mentioned in 1979 I had flunked out of college for the second time with a 1.79 grade point average at Wayne State University and I was assembling rear axle differentials for the mercury bobcat at Ford Motor Company and making

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sixty-two thousand dollars a year and I thought that was a pretty good job and it was a seven-to-three shift and then weekends and a friend of mine suggested that I get my bachelor's degree I'm so I went the easiest route which is accounting because I was a math major a friend of mine then was studying for the GMAT and I placed in the top percentile in the country got offers from universities like Stanford to go to school Cornell was the one I chose

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because it was cheapest and somehow I've ended up in the healthcare industry I've had one resume I've never looked for a job and every time the phone has rang because somebody needed my help I fix broken things and build new things I do not make the trains run on time that's not my specialty so my career has been peppered with taking companies public and selling organizations and fixing broken companies and I don't think that I could be better prepared at

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a time like this in the health insurance industry and the healthcare industry to fix an industry that really is not an industry is really not a system and given my personal experiences we're briefly described I've seen it work from both sides inside and out and it really doesn't work well and I'm here to share with you a larger vision of what it could be and some of our experiences that were going through at Aetna Aetna built this as the very first job

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we're losing a million dollars a day in 2001 and people say why raining values well we need an organizing principle around which we can rally 44,000 employees which was how much money we were losing every hour forty-four thousand dollars an hour twenty four by seven by fifty two so it was like every employee reaching into the till pulling a dollar out and burning it every hour of the day and so we organize them around these sets of principles which is meant to put the

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people who use our services at the center of everything we do and to organize their thinking when there wasn't someone around to tell them what to do so one of the things I like to focus on in particularly in this kind of talk is inspiration we really do inspire one another in what we do both personally and professionally we are a leed-certified organization we have given away four hundred and twenty five million dollars as a company through our foundation in our history we have over a million hours per every three years from our employees and

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voluntary service to the communities that serve and they contribute with our matching nine million dollars a year to their charities across the country and around the world and so our view is really to inspire one another not only in what we do and work every day but what we do and how we represent ourselves to the public so on this was an article by Zeke Emanuel in the New York Times talking about the end of insurance companies by 2020 and I would argue that the insurance companies that

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we know today will end it'll probably be sooner than 20 and 20 but we're not going away so I'll paraphrase Mark Twain who's from Hartford Connecticut where we are headquartered you know the rumors of our demise is greatly exaggerated number one we have a lot of capital number two we're in the center of all the data and number three for those of us who think about our role differently and are willing to give up control to get power we can actually have a huge influence on healthcare here and around the world

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so we've as a company been using somebody from the Stern School at New York University his name's Luke Williams and he has this book called disrupt and it's taking things that you would normally assume are cliches about what we do every day and turning them on their head and the one example he used outside of healthcare was we all believe that socks should be sold in pairs right we got two feet and they should match how many

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people in here have young teenage children daughters particularly right and what do they buy they buy little mismatched three socks in a bunch and they're all different and I'm kind of jealous because I like to live wear different colored socks and and they don't have my size um I went and checked but that's a great idea we challenged an assumption that said socks always should be sold in pairs he calls them cliches so let me give you a few clichés about the health insurance industry health care costs always go up right inexorable

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can't stop it healthy people are better risk than sick people right and then waste in health care system is unavoidable so these are three cliches that our team came up with and we chose to challenge a couple of them and I'll give you an example Aetna has been around for 160 years we have been assessing underwriting and pricing risk for 160 years the formulas we use are 160 years old I believe that

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some of our actuaries started with the company in 1851 so of course we know how to do that what's changed over the years what we assess underwrite and price so here are some hypotheses what if we keep healthcare costs flat or even lower them what if the sickest populations were actually the best risk and what if we could pay for the uninsured by reducing

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waste including paying back half the u.s. 16 trillion dollars worth of debt that are the bills of the hypotheses that we have challenged sicker people are better to take care of and we can pay back half the nation's debt over the next decade so what we have is a convergence of a few things all created by the Affordable Care Act so for those of you who were wondering why the president was focused

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on the affordable care act when the economy was headed to ruin 75 percent of the next 10 trillion dollars worth of debt in this nation will be driven by Medicare and Medicaid if you add Social Security it's a hundred and fifty percent if we solved waste in the health care system we would reduce the 2013 deficit which is nine hundred and ten million dollars by eighty percent so health care is our problem with the economy we call them entitlements because it sounds better when we

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distance them from people but it's really about health care so the Affordable Care Act has created an action-forcing event it causes people to think differently about how we solved the problem and based on technology that's always been around and some huge economic shifts that have occurred in the health care system over the last five to ten years we believe that the opportunity for innovation is now so let's talk about the economic side of this this is the waste in the health care system in 2009 750 billion dollars

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in 2009 alone this was put together by the Institutes of medicine so it's a bunch of doctors it was an insurance executive sitting around looking for a big number these are physicians who said that we waste 750 billion or approximately 30 percent of healthcare spending this year it's 2.7 trillion so call it 800 billion dollars if we fix this problem in a decade we pay back 8 trillion dollars half the US deficit if we fix just half

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of it we do what simpson-bowles did with their recommendation to the President and to Congress and we fix just 20% of it we pay for the Affordable Care Act without raising anyone's taxes so when we looked at what we assess underwrite in price this is the problem and we're part of that problem we have 44% inefficiently in efficient delivery of care and unnecessary services we have fraud waste and abuse and then we have administrative costs all my system that tries to tracked each

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individual use 20% 25% of that is insurance administrative cost hospital physician and other administrative costs so what do we do to make the system better well we have the technology today and I'll talk about that in a few minutes here's the other shift now for all of you who worry about seeing a foreign medical grad as a physician your worries are about to be over because they're not going to stay here anymore they'll get educated here but they're going to go back to their countries

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China is a hundred and sixty thousand physician short will be a hundred thousand physicians short India is short of physicians everywhere around the world is short of physicians and as those economies emerge and create middle classes that have higher expectations around social safety nuts they're going to be able to afford to keep those physicians and we won't have them and we'll have an even bigger shortage secondly physicians the economics of independent physician practice are broken insurance companies run on

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underwriting margin hospitals run on revenue and doctors offices run on cash and if you've ever run a cash business when you're trying to take risk it blows up on you and you go out of business so over the last seven to ten years physicians have gone from 25% institution alone to over 70% institutional owned if you run this number out another three years it's going to be 85% of all the practices in the United States and over two-thirds of

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all the physicians in the United States will be working in an institutional setting the second thing that's happening which is very interesting is that a lot of these institutional settings are now being run by physicians so there's a fundamental shift in the way they think about how to run the health care system and then here is a graph of the single largest tax increase on the American public in the history of the United States the

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bars on the bottom are the underpayment by the government for Medicare and Medicaid if you look at that number it's way off in 2009 and 2010 is going even further with the most recent budget proposal in reducing Medicare and Medicaid reimbursement at the states and who is paid for that you through your commercial premiums at your employed workplace or if you're lucky enough to

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be in the individual insurance market through your individual insurance payments because in the commercial marketplace today the average margin now this one big assumption this assumes that the healthcare system costs are appropriate big assumption but just work with me on this in the commercial market it's a hundred and forty percent so there's a 40 percent margin in the commercial market from hospitals and doctors to cover the underpayment of the

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government system that is a tax that's cost shift but it's a tax increase because the government is under paying and you're turning around and paying that and covering that expense the hospitals have figured out that what happens when you keep doing this at least the forward-thinking hospitals so if you keep running this line out long enough what also is happening is that more people are going in government programs Medicare and Medicaid a hundred thousand people every day retiring so if you keep running that out and you don't

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do something about it all of a sudden you're getting paid solely by the government you're getting paid way under your cost structure so let's talk about the technology side the technology side hit me really hard one day when I was standing at Macy's in New York because my daughter who is an editor at Gawker in New York and sends me an apology every time they write about me secretly when she said I had to have this sweater and here's it's at Macy's on this rack

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in this department so I took out my droid and I barcode scanned it and up pop Google Shopper and it said here's who made it and here's how much it costs and then it told me all the other stories near me that had it and I picked the cheapest one and uh perkupp Google Maps and I got directions plus a phone number that I could call and have them hold it for me and it all took 45 seconds so I bought two sweaters one for my daughter and the other one I brought to work and I started showing everybody at work we need this for

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health care so the technology I'm about to talk about isn't the genetic stuff for all the body devices implants and everything we can do and I can spend time talking about that in the Q&A we're working with all of those I'm going to talk about the very simplest technology that we have available and every other aspect of our life why shouldn't the healthcare system work for us why shouldn't we manage our healthcare versus having to use the healthcare system so here are some of the Internet

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and mobile adoption uses around the United States I just returned from China where we've done a joint venture and I'll talk about that in a minute with the Binhai new area in Tianjin and in China they have 600 mobile phones 600 mobile phones in the marketplace these are just smart phone subscribers 270 million almost as many people's are in the United States so this adoption is dramatically increasing everywhere around the world and our problem here in the United States is that every time we

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build an app for the healthcare system we have to force our members to use it because they want to use the phone and it's like everybody checks out when they enter the healthcare system and puts all their technology away and you know and and and wanders around the system like the walking dead and what we're finding in places like China and in India all people have our smart phones and mobile phones and so you don't have to re-educate people about how to use them

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because that's all they use that's how they access the system today Aetna for the last seven years has been buying technology and every time we buy them the analysts say what are you doing why are you wasting your time on stuff like this well today we now have the single bass and the only full technology stack that allows us to create what I call health plan in a box we put hospitals and health systems in our business so we call bought a company called medicinal

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thin firm ation exchange now has twenty nine point eight percent of the u.s. marketplace wired together they have a grid technology called INEX which shares the computing power of the grid were real-time node encrypted so each device is a node and we now have an SDK software development kit and ap is on a public website for everyone to write apps which can be downloaded from the INEX platform to physician and hospital's desktops to get healthcare technology much cheaper than they get it

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from their legacy vendors today all in its have to disrupt or underpriced that marketplace we have active health was the clinical decision support system iTriage which is the device that you will now be able to use in the healthcare system to get that office visit an appointment whenever you want care pass which connects across the platform all of your apps that you use for healthcare fitbit your running program your dietary program all into one application that shares the data all

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connected to our own intellectual property what have we done 40 systems around the United States are either in Leonard time or contracting with us to put this technology stack in to connect them with their with their doctors and with every other hospital they do business with to create an insurance mechanism to manage risk and what we become is sort of the intelligence inside their organizations to be able to power their systems and give them the intellectual property to manage that

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risk we have made it payer agnostic they can use it for all of our competitors and we allow them to white label it and put their own products in the marketplace in the end when public exchanges come up and we can expect them some in 2014 but it's going to roll out over a number of years we would rather have Banner Health System and their product on the exchange than Aetna banner power by medicinal Innova power

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by active health because we redefine keeping my doctor and my hospital and so it becomes a really a different kind of health care system and all we are is the intellectual property inside the system helping the management using our risk base capital to help support their overall risk management so this is a very different role for an insurance company we don't sell members anymore we convert patients and by the way the sick ones

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are the most profitable so if you think this conversation is strange have it with all your actuaries sitting in the room there going wait a minute you want us to under we want the sick ones we want to be the bad Bank because if we get paid for the risk we can manage it more effectively using this technology so imagine a world where payers manage health instead of risk because risk is sort of second nature to us and so this is our model go back to the 70s if any

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of you can remember those bell-bottoms right long hair little skinny glasses and we used to have people back then called health systems planners and health systems planners used to look at the demography the disease burden in the economic and environmental and societal trends and they used to decide whether or not a hospital could buy a new piece of technology it was called certificate of need but we decided that was just too much of a hassle and a waste in the system so we got rid of all of our health systems planners we sent them off

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somewhere they became Hospital strategic planners and what we did is we lost our opportunity to do true population health management so what if we actually looked at the demography disease burden the economic societal cultural trends of a community and said where should our hospitals be where should our practices be what kind of doctors clinicians nurse practitioners massage therapists acupuncturist should we have in the system all of the goal of improving the productivity of the population allowing them to be more economically viable and

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happy as a definition for health so that's what this is now this will happen soon but not here in the United States this is a shot I turn from a card three weeks ago this is the Binhai new area of Tianjin China where this is one of six different pods of 20 to 30 skyscrapers all 50 to 100 stories all going up at

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the same time they're all empty Gigi's keep driving around they planted 373 million new mature trees to improve the environment and it looks a bit like Manhattan when you get close enough to it because they want it to be China's Silicon Valley and they want to attract four and a half to six million multinationals to this community and they want to have a healthcare system for the future now why do they need a healthcare system well China savings rates 50% a third of

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which goes to first out for education because education ends early second to health care because they only cover 240 RMB which is 40 US dollars and healthcare everybody's insured up to 240 US dollars and then thirdly for housing and with 53% of the population now in cities their imports required to support that population our overwhelming their exports and so they need to create as part of the 12th five-year plan a inclusive economy focused on moderate

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prosperity or a domestic economy and the only way to do that is to reduce the savings right and the only way to reduce the savings rate is to create a safety net in health care and education and oh by the way if the health care system were designed properly it could be an economic engine that improves the productivity financial viability creates a service industry low carbon footprint that could then support their domestic economy that's what they want we signed a joint venture deal with T

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and Gen hi check last three weeks ago March 25th helped them build that healthcare system as a future as a pilot so they can consider it for the rest of the China it will be the largest system healthcare systems project China's ever invested in 300 million RMB and so this model is really built around that population health management model I showed you creating a happier population now it's not all altruistic it's a political problem for them as well unless they get

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this problem solved and what they don't want is the finance minister told me in my one of my meetings with him was we do not want the US healthcare system because in 40 years we can't afford it now China little known to most people will have more people as a percentage of the population over 65 by 2030 than any other country in the world will be 29% Germany's eyes 427 percent currently they have ninety seven point five million diabetics we have 27 million in

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the United States so they already have this problem they just don't know it and quite frankly people just don't get the care one of our hottest selling products in China is for the high net worth individuals to be evacuated out of China for tertiary and quarternary care they will pay anything for that policy so this is where the future is going to start and as I like to say we think about the States and here in the US as the laboratory for democracy the laboratory for the new health care system is going to happen in places like China in India

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Riyadh Qatar all places where we're talking about this kind of project as a company not insurance we're not underwriting anything here we're building a healthcare system that can be underwritten when the middle class gets to a point where we have enough economic personal disposable income for them to buy insurance and how about a world where the sick can find the care they need in the palm of their hand so we bought this company called iTriage and it's free you can download it and we've had over nine million

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downloads it has a symptom checker you can get appointments with your provider you can send them your health data out of your personal health record and you can get follow-ups from the physician and we'll have here in another month or so when we launch is the ability to buy care on the spot market basis that's vacant near you think of it as open table for health care lab tests x-rays flu shots office visits and we'll buy it and then we'll resell it for convenience

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so what we want to do with this piece of technology is want to redefine quality as convenience because for most people that use the healthcare system today one of the biggest compliance issues is it's too hard to get it done I've got to work my life around the healthcare system instead of taking care of my health on my terms and this piece of technology is going to do that so our whole move is to make it easier and as one of your

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professors BJ Fogg here at Stanford has talked about is you know you need to make it easier you don't have to compel people and I can have a conversation with any one of you about diabeetus and what it will do to you if you keep eating and living the lifestyle you're living and we can talk about what that means for you when you're 30 years old or and when I talk to even people in their 20s they go yeah yeah that's great mañana but if we make it easy to do we can have an impact things like my my top

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band that I'm wearing and so that gets connected to how about a world where healthy comanded where the healthy can manage their wellness in health in one spot and so we'll launch as well care pass which will connect all of your apps to one's data set so when you update one piece of data and any of your other apps and updates the rest of your apps again easy so that you can track it so this is the future of health care where the consumer takes control of the healthcare system not the insurance company not the

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hospital not the doctor oh that will be the difference where you are in charge of your health versus trying to make the health care system work for you and none of it is bleeding edge technology right none of it so it's really about mass customization for the individual using population health making people more economically viable and happier excuse me so the healthcare system is going to

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change because the Affordable Care Act has created an action-forcing event in October of 2013 all the fundamentals of the health insurance industry will change that will ripple through the healthcare system doctors hospitals patients and it will all be up for grabs as I said to our team we have three hundred full-time equivalents working on this everyday inside our organization we took our brightest people and put them in a in a project management office they said to

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them we need to be compliant with the new law but we've got to find all the ponies in that stuff because there's going to be bunches of ponies and when people fail we want to be on the other end of it to consolidate and make the system better so the Affordable Care Act is driving this the system will change it's really about the consumer and their own access to the healthcare system managing their health versus managing their health care and we believe that will be a key part of this but in a

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fundamentally different way as an organization and by the way as a final point the healthcare cost problem is a major problem in every country around the world regardless who pays for it what's going on in Western Europe and southern Europe is a fight over the social contract that people thought they had after World War two that is no longer affordable and their governments are paying for it and what's going on in the Middle East and China is a stunning fear on their part that they're going to end up with what we've got in the developed countries so everybody's

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looking at this issue everybody's focused on it and I think the opportunity is here in large part because of a simple act that was patched and passed in March of 2010 so thank you very much for your time and attention I'll take any questions that you may have we have microphones up here and being from Detroit I cannot be intimidated or insulted so any question is a good one could you comment on care seniors in the last year of life as well as very health

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issues so on July 15th 2002 I put my son into hospice me a t-cell gamma-delta lymphoma that was considered incurable and I had lived with him for a year and a half in the hospital trying to fix it and in order to do that I had to admit he was going to die in six months and that I could no longer see curative services well we found a drug in Europe to help feed him he was starving from his cure and we actually he graduated from hospice and he's now a quant at State Street financial advisors in

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Boston and living a very good life he was the recipient of that kidney I gave away in 2007 and we get together on Sunday evenings and get the kidneys back together and drink blood long necks when I got back to work we changed our end-of-life program now what we sad was we are no longer to make you admit you're going to die in six months and we're going to allow you to see curative services even while you're in a hospice and because we're afraid of what that would do to our cost we did it with our

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cell phone and clients you know let Mikey try it right and we did it with our cell phone and clients and we were stunned with the results eighty nine percent drop in acute days seventy nine percent drop in in in procedures and 80 percent drop in costs and feedback from our customers from our members that was just incredible and so now we all of our clients got it we think that ought to be the standard across the United States now we introduced it to the White House during the healthcare reform debate and

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they wouldn't touch it because of death committees right death panels and so we brought it to IOM and said why don't you hold up conference we held the compris and we haven't made much progress because I think people are afraid to touch it because of the political realities but we think that's the way to move forward it's easier for people to do yes thank you for your time I do research in BJ's lab here and sometimes get to work with your Etna folks so I'm thrilled to listen to you so a lot of what you talked about is really exciting

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and also heavily dependent on healthcare consumerism here in the United States and we've been receiving our health care through employers since World War two and so they're shipped to healthcare consumerism is what culturally we're hoping for I was wondering if you could comment on that and talk about what Aetna and other payers are doing about that the shift to healthcare consumerism is unstoppable and inexorable for a couple of reasons one is that employers

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have been shifting 50% of the increase in healthcare costs to their employees each year for the last seven years and so if you keep that trend going for another five employees we'll be paying half of their health care either through out-of-pocket costs on benefits or insurance shared insurance premiums and so when that happens they're going to say well what are you guys doing for me on trend right and and so we believe it's inexorable the second thing that's going to happen is that the public exchanges have now freed the minds of health insurance executives around the

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country to build private exchanges and what private exchanges will do is create marketplaces for individuals that allow them to get a value equation on benefits that matches their personal lifestyle so there'll be more offerings and because there will be more offerings they'll be able to select with selection tools that we built and tested and actually the overall pools risk goes down because people are not under insured or over insured they're insured just right for what they expect for their families so it's going to be a consumer marketplace

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even though the employers may be involved but I think evolution evolutionary over time they'll actually sort of disappear and move the defined contribution and also go so it's it's going to happen it's here we believe it's here it's just early in the game but you can never get too early get started too early on the change mmm yes hi mark sitter I appreciate your comments and support of everything you're doing I might concern in terms of health care costs going up the biggest chunk of it and the

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fastest-growing and probably the place we greatest waste is hospitals and it's hard to be much of a consumer in the hospital side Aetna good example your you know your typical at seven eight nine percent market share in any local area and it's very local issue so how can either the insurance industry or consumers really make a dent and what is the biggest and fastest growing part of the costs so the consolidation you're seeing that showed on that slide consolidation with physicians is also happening between hospitals and systems are getting larger and so the model of what I call mutually assured destruction which is when we beat each other up in

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the marketplace until somebody loses or gives up or gets tired won't work because the people to get lost in the middle of that are the consumers the people are using the healthcare system so we need to fundamentally change our relationship and so our model of infusing our technology and capabilities into their own running of the system will cause them to change that and the systems that are forward thinking we've selected the systems we're working with very carefully to make sure that we have people that will get it right so that we create okay I want one of those too over

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time now the thing that I don't talk about often is the ugly problem that's going to happen five to ten years from now and that is you know we used in Michigan where I grew up he's to get water in the basement in the spring when it would rain and so you go downstairs I got three feet of water in the basement that wasn't bad it was when the water went away that you had this horrible problem but you had to clean up well when we get through this shift there will be all this stuff we have left that we won't know what to do with capacity you know I go up to Blue Hill Maine

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every summer the Blue Hill hospital I mean I can't imagine what goes on in that place and why it's still there but they the people in that community love it but that place isn't going to survive and so there going to be a bunch of places and things and technologies and doctors particularly specialists that we are going to need anymore how do we best use them well in emerging countries like China they are doing everything you can get to get primary and secondary care systems up cordon Airy tertiary care systems are way to a bridge too far for them anytime soon so the potential to

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export our expertise through technology and other means is going to make a big difference or to get the people here for care so I think that's going to be how we're going to manage it but that's stuff all that stuff laying around going to be the big problem and I think that's where we're going to see the big public problem and I think we saw that in UK a few years ago when they try to shut down some hospitals as part of their health reform effort I can relate to your comments about the upcoming physician shortage because I was appalled to find that my

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medical school that I guarded at 40 years ago the size of the entering class has not changed in 40 years um so my question for you is can you comment on the article that was in the Atlantic recently the robot will see you now about the coming presence of robots and also about the the model where the decision-making is ratcheted down and that the physicians are the ones just supervising ancillary healthcare personnel so I think the second part is probably the more realistic than the robot but you know robots sell magazines

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right and and so you know I think the real issue is going to be a new model of healthcare today in a physician's office the staff works to support the physician and taking care of the patient in a new model called patient-centered medical homes the staff all focuses on the patient and where you have your clinical nurse practitioners you know cranial-sacral therapists acupuncturist who all do their own thing and that the physicians use of skills is for the far more cognitive laying out of hands kind

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of things and when's the last time anybody's been to a doctor the doctor actually touched you right I mean I have a spinal cord injury and every time I go see a doctor for follow-up in evaluation show you I saw your films and I looked at your stuff I don't need to examine you so I think the whole shift and the way we treat people in the doctor's office has to happen it's going to be this patient-centered medical home and it's gonna be driven by the shortage because we can't nearly educate enough doctors and the time it's going to take to get them to meet that shortage yes sir yeah thanks for your comments specific

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question so policy limits the removal of policy limits do one of the key functions be POC I'm sure it's kept your actuaries thinking a little bit about the implications I'm curious about the implications you think as a major don't insure in terms of the removal of annual and lifetime limits and specifically the experience you have in social media last year on the student health yeah with our G the on the on the first part of the question you know nasty little secret it didn't cost that much true right so it's been

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no big deal you know I mean we when you put it over a broader population the cost really isn't there so I think we didn't see the kind of impact we thought we would saw would see and quite frankly it's been pretty good now utilization is really low right now because of the economy because what people are paying out-of-pocket so I think we have an artificial environment an artifact of people not using as much cure as they otherwise would which so far we think is a good thing because we're not seeing people avoid chronic care that they need

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we're seeing people not getting an antibiotic for a cold which is all good stuff so people aren't hitting those policy limits the second one on social media so one of my goals in this job and CEOs are fleeting I'm the 14th chairman of a hundred and sixty year old company and we have a very short half-life the first chairman was around for 20 years and now we usually last five or six years now but one of my goals is to reestablish the credibility of corporate leadership in the eyes of the American public really tall task the only way you

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do that is make yourself available as my PR folks over there will tell you I tell them they can prepare me they can't protect me I'm going out there so I was out on Twitter and and you know I got engaged with this patient it was a student he was you know his late 20s he got colon cancer and he had a policy that the universities sold that was really cheap at three hundred thousand dollar limit so as a student you think you know what are the chances I'm going to hit three hundred thousand dollars worth of healthcare well he got Stage four colon cancer and he was well through it so he tweeted me and said I'm

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a hundred and eighteen thousand dollars over why don't you write a cheque given that you made nine point seven five million dollars last year and I engaged him and you know when I engaged him all of his friends piled on and I was in this very intense conversation for about twelve hours while my team I have a bunch of Twitter reps work with me now that follow up behind me they were working out our arrangement with the school to try and get this kid more coverage and so we saw what we

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found out was there was five other students that hit the same problem they weren't now all colon cancer but they were hitting their limits at the same University right and so what we did is we had the university pay op premium for each of those six people to a five hundred thousand dollar limit and then we renewed them at a million dollar limit the next year and then of course when the Affordable Care Act kicked in there was no limit and we were able to get them covered and we got it all paid now our eg just passed away two weeks ago on

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the end of March because he was pretty advanced in his cancer but that is just a typical problem that I deal with a dozen of those every day not as big a case but cases now that reach out to me and want me to help and we solve most of those problems and we also say no to some people who have you know expectations beyond it now where's this all headed I would argue that if we do population health management right we don't need benefit plans now you have one of those here in California it's called the scan health plan down in San

40:58

Diego and it's called a social HMO where we provide all the benefits necessary to keep people healthy follow-up cab ride to the office after a discharge from suggestive heart failure you know diapers from others of three who can't afford them all toward making this investment in keeping people healthy so if we make that leap and I may either be on the beach or taking a dirt nap by the time we get there but that is sort of the evolution we need to move to where the the community gets together and say this is what we should provide in the way of services to people to keep them

41:29

healthy yes so I look at things from a little different perspective that's how you add the liability factored into the conversation and are you and what weight do you put to that when you speak to for instance the the nurses or staff taking care of a patient instead of the physician and then some of these personalized apps I wonder how that's being factored in from your perspective well you know on the latter part on the apps we do spend more time with the FDA then we would like and we

42:00

try to stay this side of having to be regulated as a medical device but we're getting closer with each evolution that we make and so we know where that line is and we're trying to stay on this side of it but I think we'll eventually have to cross it and you know we're working with companies like Medtronic to connect to their pacemakers to follow arrhythmias and to report those into our clinical decision support systems and get the information to the doctor before the patient even knows they've got a problem and all that's going to drag us

42:31

into the FDA compliance problem and we'll have to get approved so we're not quite there yet but we're on this side of it and the liability side of things you know we are we've been dealing with liability and we have a list that would probably impress you of cases going on in any given day and I think what we handle those well and part of handling it well is really to be very honest with the people we're dealing with and be very transparent about what they're getting in that getting and I think that works in the practice setting as well because people often don't get explained

43:03

what's going on they don't get the right set of information to make good decisions and they have different expectations and they should have and want to blame somebody they get angry and and you know I'm probably abnormal I worry less about malpractice liability as a driver of healthcare costs then all those other things up on that list and so we could solve those you know we can then get at malpractice side but all those other things I had on that circle of 750 billion are far more significant

43:32

than malpractice right now okay as we move from volume based care to value-based care how do we really measure the quality of care and who is the arbiter of that quality so the quality of care is gonna be in the eyes of the person receiving the care but when I broke my neck I have severe neuropathy my left arm feels like it's burning on fire all day long even at this moment and the only way and when I was given seven different narcotics and

44:06

I walked around like Charlie Brown in the peanuts commercial you know when his mother would talk while the whole world sounded like that to me and I knew I wasn't going to be a highly functioning human being I went and got cranial sacral therapy acupuncture I carry my own needles now and do it myself and I use yoga and meditation to manage my pain every day I take no pain medication now that is outside the norm of what we would call healthcare right and but for me that's what makes me healthy and so I think

44:37

this definition of I decide what's healthy for me versus what some arbitrary set of metrics decides what's healthy is the most important thing and so getting that into people's hands and allowing them to make that decision will make them happier and healthier now how do we pay for that and I think we need to and so back to my number of you know what if we just said no more increase in health care across what have we said 2.7 trillion is enough all you figure out how to spend that differently I think we could do that

45:07

we've got governance issues and a whole bunch of other issues but I think we could figure out how to do it differently if we just kept the budget flat and so I think it's that's moving it to outcomes based our people healthier are they happier we should actually measure people's happiness with the healthcare system everybody loves their own insurance company but hates insurance companies interestingly enough and so I think this this notion of I feel healthy and I'm and I'm happier as a result of it and I'm productive and I have economic sustainability because of

45:39

that productivity should be the definition of it long way to go but that's where we ultimately need to head yes sir thank you Mark in this inevitable world of consumerism in every every other aspect of being a consumer price transparency is a foundation it's a fundamental can you talk about what you see that as the role of a price transparency in particular what that is doing to support it both internally and in support of others who are trying to pursue so we have the top

46:09

30 prices of what we pay to every provider in the United States on our website for any member who wants to look at it less than 10 percent we have a member payment estimator tool that allows you to auto adjudicate your claim on your smartphone at the doctor's desk and settle up with your provider less than 10 percent use it so it's something fundamentally wrong with people's so this care pass platform is really about changing that where I go to

46:41

a place where the ecosystem supports me and interacting with the healthcare system versus having to go to this app to find my doctor this have to find out how much it's going to cost this app to pay for it it needs to be in a common eco system like that Google shopping experience where Google Shopper popped up and then Google Maps popped up all at once without me having to do it and so I think that is where we need to go next in order to get it done transparency will be critically important and people are more and more asking for it right now we're all over the map from a transparency standpoint at Aetna we have the real prices we pay absent the

47:14

benefit determination which we can now do as well but there are reference based pricing which I don't think works really well and people don't people sort of look past it but as their pull more out of their pocket they're going to they're going to start asking that question the best thing to do is move away from that model a fee-for-service to bundle payments and I think that'll be the stuff that will make that transparency go away or that issue anyway yes that actually leads quite nicely into my question which is we're focusing on you know if if consumerism and healthcare is

47:45

isn't is a wave of the future it could be argued that over treatment and over utilization could be somewhat driven by this consumer demand of healthcare services and a lot of that demand is sometimes supplied or driven by physician decision-making this needs to happen this test needs to be assigned which could be considered one of the reasons for rising costs so what role do you think physician payment incentive models and what role does Aetna play and driving physician behavior and decision making a few J so I think it matters and

48:16

I think the the the juxtaposition of member out of pocket physician reimbursement and the medical management model which includes transparency and advice and all those other sorts of things is going to really create a behavior change but it needs again to be simple it needs to be like falling out of bed and and so you know I think that model is where we need to go but I don't hear hears them here's the problem I was if you if I agreed that I was going to pay

48:47

90% of your next car what kind of car would you go you get a car ten times the amount you could afford to pay for a car right that's the economic principle that's the problem we have in the health care system if I only have to pay ten percent of my costs than anything that I can afford up to that ten percent the ninety percent somebody else's nickel I'm okay with that and so I think the shift in benefits is going to create a change but it really needs to be informed by data and it needs to be simple to god I think ultimately what I

49:21

would I would argue and what we're doing with some of our major health systems is creating budgets and saying here's what we think health care costs on average across the population should be we'll take half the risk you take half the risk and we'll give you all the technology to do that that's what we're doing we actually have some health systems that are saying we'll take 80% of the risk because we so much believe in our ability to better manage better governance and better manage our population that we will take 80% of it and they're winning so far Thanks hi hi mark um I guess this is the last

49:50

question my question for you is around how do you create a more educated consumer in a marketplace where they're going to be directing their their health care decisions specifically in terms of the level of care and in terms of the site of care so they utilize the system appropriately so I you know I think trying to educate everybody on how the health care system works in a level of detail isn't going to work sorry to say and and the reason is is that unless the amount of information I can gather is

50:22

immediately available and that when I act on it it has an immediate response I'm not going to pay attention to it let's look at my favorite topic obesity right mmm sixty-two percent of the American public is overweight you know more than a third third of the American public is obese and in our population of you know thirty seven and a half million people that we manage thirty-four percent have a chronic disease which drives 75% of our healthcare

50:52

spending and all those people that have a chronic disease more than half of it is ways related to their body weight so in 2009 we spent billions of dollars in this country to prevent the swine flu from killing 10,000 people and we lose that many people a week to obesity now if I were to have that conversation and say you know put the cookie down because 25 or 30 years from now you're going to have metabolic syndrome which is highly

51:22

correlated to waist size and to fasting glucose and that means you can have a 60% chance of being diabetic which is going to cost you money dramatically impact your lifestyle caused you to maybe lose sexual function and a whole bunch of other things limbs and you ought to be worried about that right now people yannick are you done yet because I got you know I got a party to go to and so I think that is our problem and that is the biggest single because it is a pandemic across the United States this

51:53

disease and it's a pandemic around the world and we're and we're not doing that China Saudi Arabia has the highest incidence of diabetes of any population in the world and you know why 50 years ago they found oil and being overweight and having somebody else do your work and eating really good food was a sign of wealth and when I talked to one of our partners from the Oh Leone group in in Riyadh about why is this happening

52:24

she said mark two generations ago my grandfather was a bedouin tribal leader starving in the desert and now we've arrived with the highest diabetes burden in the world so I think that so so health education on those issues aren't going to work we need to make it real easy for people to stay fit so I've got my you know my up band and I put it on February 7th I've lost 15 pounds since then because I'm a data geek and I look at it all day long how many calories have I consumed how many of I need to go

52:55

for a walk instead of that last glass of scotch I'll go for a walk and that's what people need to see needs to be immediate it happens now and you're interacting with it now thank you so very much for your time and attention

Reinventing the Health Insurance Business

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