Ep. 13 Larry Thompson: Healthcare Reform Starts with Understanding Systemic Accountability

Why Healthcare's Dysfunction Is a Feature, Not a Bug—And Who Benefits From Keeping It That Way

Lawrence Thompson has spent 35+ years in healthcare leadership roles at some of the industry's most prominent organizations. As CEO of Benefit Systems Inc., and with previous executive positions at Aetna Life & Casualty, HealthAxis, and HealthNow where he managed over $1 billion P&L, Larry has seen the healthcare system from every angle. His assessment? Everyone is complicit.

Vincent (Vinny) and Larry begin with a candid discussion about why Larry launched a podcast with no financial agenda—purely to share unfiltered conversations about healthcare. Larry acknowledges that most industry voices have incentives that compromise their objectivity, making independent perspectives increasingly rare and valuable.

The conversation quickly moves to broker accountability. Larry doesn't mince words: many brokers prioritize commission structures over client outcomes, perpetuating a system that rewards volume rather than value. He explains how broker incentives often align more closely with insurance carriers than with the employers they supposedly represent, creating inherent conflicts that drive up costs.

PBMs emerge as a particularly troubling example of systemic manipulation. Larry describes how pharmacy benefit managers have built deliberately opaque business models that exploit information asymmetry. The complexity serves a purpose—it prevents employers from understanding where their money actually goes and who profits from each transaction.

Larry emphasizes that fixing healthcare requires holding every stakeholder accountable. Insurance companies, hospitals, pharmaceutical manufacturers, PBMs, brokers, consultants, and even government regulators all contribute to the dysfunction. The lobbying power protecting the status quo is immense, with billions of dollars invested in maintaining current arrangements.

Value-based care models represent potential progress, but Larry cautions against viewing them as complete solutions. The transition from fee-for-service to outcomes-based reimbursement faces resistance from multiple directions—providers fear revenue loss, and administrative complexity increases significantly during implementation.

Larry is writing a book that will systematically examine each healthcare stakeholder's role in perpetuating the broken system. His goal is honest accountability rather than proposing simplistic solutions. He believes meaningful change requires confronting uncomfortable truths about how financial incentives shape behavior throughout the industry.

The conversation touches on why innovation struggles in healthcare. Larry explains that breakthrough solutions often threaten established revenue streams, leading incumbents to acquire or suppress disruptive technologies. The result is incremental improvement rather than transformative change.

Government regulation receives pointed criticism. Despite decades of transparency mandates and reform legislation, meaningful price transparency remains elusive. Larry suggests regulatory capture plays a significant role—industry lobbyists heavily influence the rules supposedly designed to constrain them.

Larry acknowledges his own "passion project" aimed at making a positive impact in healthcare, though he's realistic about the scale of change one organization can achieve. He recognizes that systemic problems require collective action, but notes that most stakeholders lack incentive to disrupt profitable arrangements.

The episode concludes with Larry's wine preferences—he's evolved from favoring robust Cabernets to appreciating the complex blends emerging from Paso Robles, where French winemakers are producing world-class wines. He highlights L'Aventure winery, the first in Paso Robles to re

Transcript

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Welcome to the Clearly Beneficial podcast,

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the show where we rip off the Band-Aid and explore the future of healthcare,

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benefits,

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and the people driving innovation in the industry.

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This episode is brought to you by Health Next,

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the company leading the way in helping employers build enduring cultures of health

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and wellbeing,

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reducing medical cost trends,

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and increasing organizational performance.

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To learn more how they can help you, visit healthnext.com.

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Well, hello, everybody.

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Happy Monday.

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And this is a Monday that we're recording.

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It was a very wet Sunday night here in Northern California.

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But I'm really excited to welcome Larry Thompson to the Clearly Beneficial podcast.

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Larry and I have known each other, it seems, off and on for 10, 15 years.

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And I consider him one of the OGs of the industry.

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His background is broad.

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in the healthcare space, particularly in the arena of self-funding.

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He's done a number of things over the years,

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in my mind,

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to be super innovative in the areas of funding and other areas.

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And we're going to cover a lot of that in the podcast today.

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So welcome, Larry.

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Thank you for having me, Vinny.

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Good to see you.

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Great to see you.

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And so maybe for the benefit of the audience,

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maybe give your kind of 30-second to 60-second who you are,

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where you came from,

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how you got into this business,

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et cetera,

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et cetera.

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Okay, it's going to be hard to compress 46 years into 30 seconds, but I'll give it a whirl.

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I was born and raised in Jamaica.

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I swam all the way to California.

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Here I am.

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No, I'm joking.

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I was born and raised in Jamaica, but I went to university here on a graduate-graduate.

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did not mean to go into the insurance industry as so many people I'm sure who does

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have the same story and ended up starting my career with Aetna Life and Casualty

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spent four years with them and then left them and finished my MBA and then went to

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work for planned services which was quickly bought by Dun & Bradstreet and became

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the largest

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TPA, I think, in history thus far.

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And I became executive vice president, spent eight years there.

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I left that and decided that I was going to become a general agent and opened my

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general agency here in California and found that people really didn't want me to be

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a general agent.

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They wanted me to go back to being a TPA.

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So I ended up opening my own TPA

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and ran that for 16 years and sold it and thought I was going to get out of the business.

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That did not work.

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Well, it's kind of like the mafia, right?

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You get out and then they pull you back in.

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Yeah, it was like they had the dirt on me and it was just constant.

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Actually,

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it was my CPA who came to me and said in 2002,

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he said,

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Larry,

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listen,

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you just can't keep getting checks from these people for doing consulting for them

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and putting them in your personal bank account.

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You need to form a company.

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Hence, Benefit Systems was formed in 2002.

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You know,

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I've spent the last 20 plus years doing all kinds of interesting things,

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all driven from the consulting side,

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but doing what I call residencies with my clients.

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So when I first started out, um,

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you know,

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I was working,

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consulting with a BPO technology company in Texas that was on the NASDAQ exchange.

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And they asked me to come in and help them in trying to groom the company for sale.

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I gave them a strategic plan and the board liked it so much.

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They said, look, would you join us as COO, help us to get it ready and going.

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So I took

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Three and a half years, went to Texas and did exactly that.

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And we ended up selling it.

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Great experience for me because I learned,

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I filled a gap I had where I really didn't know the BPO and technology side as well

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as I knew,

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you know,

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the finance and the sales and brokerage side.

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So that was great experience.

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And of course, I also learned a lot about public companies and all the regulations around.

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And then got recruited from there to do some consulting for a holding company in

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New York,

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upstate New York,

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which ended up owning two blue companies.

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So that became my blue experience because they asked me to join them as the chief

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commercial officer for two blues in New York.

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in Buffalo and Albany.

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And so that was quite an experience, quite enjoyable.

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Big weather change from California.

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Yep, yep.

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And then when my contract was up, my beautiful wife said, I need to get back to California.

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So we came back here.

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As one does.

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As one does.

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She's a California born and raised.

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She didn't like the snow.

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So came back here and then just continued to do consulting.

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I actually had a TPA I tried to buy when I was with the Blues in Syracuse, New York.

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And they didn't want anything to do with the blues.

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And when I left the blues,

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their owner and CEO contacted me and said,

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hey,

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would you come here and help me to groom the company for sale?

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I'm getting up in years.

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I'd like to go.

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At the time, it was the largest independent TPA in the country.

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So again, I took off and I stayed in California, but did a lot of commuting.

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Yeah.

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We took that company and ended up selling it to United at the time for the highest

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multiple ITPA had ever gone for,

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which was fun.

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I had a lot of fun doing that.

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It was a great, great organization.

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Yeah.

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And then left that and came back and just,

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again,

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working for a variety of different organizations,

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doing a lot of different things.

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And that's when,

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of course,

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kind of in between those two things,

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when I was working for that TPA and doing a little consulting,

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that's when I started working with Duncan and all the folks at Dignity when I met

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you.

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Yeah, all right.

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Yeah.

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And so we continued that D2E program for 12 plus years,

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you know,

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working with Tammy and the folks over there,

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which was a great success.

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Yeah.

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And funnily enough, we're still working with them.

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So it's kind of fun.

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I mean, that thing was, I think, again, innovative.

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Your background has always been very interesting to me because.

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You literally came into the business from the self-funding TPA side.

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So you knew

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what the building blocks of the industry were.

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It's like you knew the behind the scenes secrets of how a health plan functions.

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And you use that knowledge to innovate in various ways,

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which you're still doing,

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I think,

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today.

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And so a lot of people come into the industry

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I didn't come into the industry with any of that knowledge.

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I came into the industry as a broker selling small group, fully insured.

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I would say most of my career was in the fully insured environment with some

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self-funding and level funding.

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The more you're in it, the more you learn.

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You definitely came in almost the yin to my yang in a lot of ways because you came

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in knowing...

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I always talk about

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Fully insured is you buy the Lamborghini and self-insured, you build the Lamborghini.

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And we came at it from two opposite places.

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Wouldn't you say that?

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Yeah, yes and no.

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I mean, my original start with it was all fully insured, large group, small group.

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Dun & Bradstreet, we were the largest MET TPA in the world.

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So I had 16 fully insured carriers that were my responsibility.

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And all we did was small group,

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you know,

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we were writing,

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you know,

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four to 5,000 cases a month in small groups.

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So I had a lot of experience there and actually didn't really taste that.

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self-insurance till we started to acquire other TPAs because our MET business was

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growing so fast.

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And I was part of that acquisition team.

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And as we started to buy the TPAs, a lot of them were very biased towards self-funding.

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Most of their business was self-funding and less of it was MET.

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And I had no choice.

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I had to learn that business relatively fast.

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Now I'd known the reinsurance side because we had to do a lot of that with the MET stuff.

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So it's kind of weird.

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I kind of had experience on both sides and it gives you perspective.

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I think you're right.

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There is a lot there.

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And of course, self-funding is much more,

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you know,

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structurally innovative in that there's more flexibility and you can do things

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differently.

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And so that's kind of what attracted me into the TPA side because I felt like you

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could innovate.

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And we did a lot of that when I owned my own TPA and we're still doing it today.

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Yeah,

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no,

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I mean,

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when you came to the Sacramento market with the Dignity program,

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the direct to employer market program that you were rolling out,

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I believe,

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and you had Bakersfield,

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Ventura up here and maybe a few other locations.

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I mean, I thought that was really a really smart way of approaching self-funding for employers.

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I think, and where I want to kind of, I want to

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Later in the episode,

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I want to talk more about what you're doing today because it's really interesting.

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But what I want to kind of segue into is sort of the current

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you know, how do we get to where we are today?

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You know,

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I mean,

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we're at a point in the industry and health insurance where,

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and I'm not even going to go into the ACA plans and all the headaches going on with

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subsidies or not subsidies and all those trials and tribulations.

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But I feel like, and I've said this for a couple of years, that, you know, the group market

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the employer market,

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particularly the mid-market,

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and I'm defining mid-market,

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that kind of,

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you know,

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500 to 5,000-sized employer,

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is I feel like they're in crisis in a lot of ways.

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You know,

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we're hitting a point where the premium,

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the effective premium to cover an employee is pushing $1,000 a month.

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The family is

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is three to 4,000 a month.

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So we're talking real dollars.

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And I reflected back on looking at when I started in the business in 2003,

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what it costed then to insure an employee,

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which was probably around $150 and 450 to insure the family.

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And now we're almost adding a zero to all that.

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And so I kind of want to discuss with you

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You know, how do we get to where we are?

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I mean,

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everybody wants to blame the evil insurance companies,

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but I think there's a lot of blame to go around,

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don't you think?

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There absolutely is.

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And, you know, one of my heroes in my traveling journey has been a guy named Ove Reinhardt.

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And I don't know if you know who he is.

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but he is famous for having published an article in 2003 titled, It's the Price is Stupid.

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And he was really a famous economist and he died in 2017.

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But what was interesting is that after he died,

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Harvard Chen School of Public Health and LSE,

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London School of Economics,

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where I went,

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published in March of 2018,

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a definitive article in JAMA that basically debunked all of the thoughts that

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people have around why healthcare in the U.S.

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is as expensive as it is.

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And I would say to all of your readers, go find it.

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It's a short read and take a look because it really focuses on what I've said now for

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at least 30 years, which is the unit cost of healthcare in the United States is just too high.

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And there is no explaining it.

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There's no excuses for it.

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Personally,

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I've lived on four different healthcare countries,

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if you will,

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Jamaica,

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Canada,

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the UK,

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and the United States.

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So,

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I mean,

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I can talk from personal experience,

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but I can also talk from working in those countries.

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If you look at the OECD nations, there are seven, the big ones, right?

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The Europeans, the Canadians, Japan, et cetera.

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That's the benchmark that we compare ourselves to.

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If you look at any of those cost factors, you're going to find that we just charge too much.

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I mean, I'll give you a living example.

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My niece is a fully certified orthopedic surgeon in the national healthcare system in England.

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She has busted her tail end just like anyone in the United States would and is now

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a specialist.

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Do you know how much they pay her?

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$125,000 a year.

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That would be a blessing.

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Try $97,000.

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Wow.

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And compare that to what was just published,

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which is what is the average orthopedic surgeon making in the United States of

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America?

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$350,000?

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$478,000.

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Now,

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take that across the board on anything you want to take the measures against,

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and you will find,

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compared to all these other nations,

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that's our problem.

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Our problem is that we are spending too much money on health care.

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And let me debunk a few things.

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One of the things that people say all the time is, well, we overutilize health care.

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This study showed that we're about average.

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The time in patient,

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the amount of physicians,

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et cetera,

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people argue and say,

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we have too many specialists.

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Debunk that.

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If you go and look actually compared to those OECD, we're about the same.

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What I guess I've taken away from this is,

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do we have other problems in the healthcare industry besides cost?

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Absolutely.

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But where I think Reinhardt was a brilliant person in 2003 to say it's the price,

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everything starts with that.

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How can we exist as a society where a family of four pays between $27,000 and

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$30,000 a year for healthcare,

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according to the KFF?

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Before they even use any of it.

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Exactly.

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And we all know what's happened there, right?

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Because plan designs,

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the way they are today,

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we're not talking about $100 deductible plans that you were selling when you

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entered this.

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Yeah.

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100% hospitalization plans, $10 copay plans.

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Or God forbid,

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when I entered the industry in 77 in Texas,

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where we were selling 100% benefit plans,

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period.

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There were no deductibles.

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There was nothing.

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And an employee cost was about $25, $30 a month.

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So everything.

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Let me just try to chime in real quick and then I'll let you keep going.

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Blame the fact that, you know, if you remember the mid 90s, right?

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I mean, I came into the insurance business in 2003.

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But in the mid 90s,

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when I was,

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you know,

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in different industry doing different things,

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you know,

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the big buzzwords were reengineering the corporation.

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Everybody was re-engineering.

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They were becoming more lean in their operations.

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They were high quality, lean manufacturing, all lean processes, all the things.

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I feel like that whole conversation bypassed the healthcare industry on every

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single level with the exception of probably pharma manufacturer.

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In the day-to-day operation of hospitals, there's nothing lean about it.

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Because of the inertia that

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has gone on for the past 30 years, you cannot stop and get in front of that train and stop it.

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They're building a brand new,

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every morning I talk about perspective,

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every morning I take the dog for a walk around the cemetery here,

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East Lawn Cemetery.

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And right in my eyesight every morning is the new hospital tower they're building at UC Davis.

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I remember going to an event a couple of years ago, the Business Journal of Healthcare,

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the interim CEO of UC Davis Medical Center,

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got up there and said,

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yeah,

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the price of that building when it's all in is $30 million a bed.

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Everybody was shocked at that number.

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And he went on to justify it in some way.

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But that's where we're at, is that

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hospitals, in a sense, I always joke that Pfizer played with monopoly.

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Hospitals, in a sense, they play with monopoly.

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Is that resonating at all?

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I refer to them as an oligopoly.

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And if you look, their practices are rinse and repeat.

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And so I tease people and say, you wanna have some fun?

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Go take a 10 year longitudinal look at the CEOs that have moved around from

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hospital system to hospital system.

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Go and find an outsider that has been brought in to truly bring in innovation and change.

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It doesn't happen.

(00:19:23):
And so the problem is,

(00:19:25):
What's the definition of insanity, right?

(00:19:27):
Doing the same thing over and over again and expecting a different result.

(00:19:31):
And the other thing I think we have to recognize is that managed care was a boondoggle.

(00:19:38):
It was an absolute failure.

(00:19:41):
Pay for performance, value-based care, all of it.

(00:19:47):
statistically now know that it does not have the effect that we were told it was going to have.

(00:19:53):
But it's coming roaring back now.

(00:19:55):
I feel like, you know, people are.

(00:20:00):
Yeah, no, you're you're correct.

(00:20:02):
And so I think part of the challenge is that people are are sucked into that

(00:20:08):
thinking,

(00:20:08):
oh,

(00:20:08):
this is going to be better the same way we were told Obamacare was going to

(00:20:13):
decrease costs.

(00:20:16):
No, it never could have decreased costs.

(00:20:19):
And it's done exactly what it was designed to do, which is to drive up costs.

(00:20:23):
So I don't want to spend too much time on it.

(00:20:26):
But my personal opinion is after all this time and everything I've seen.

(00:20:32):
that at some point we have to get a handle on the unit cost of healthcare.

(00:20:38):
Now, once we do that, then we start to solve other problems.

(00:20:42):
Because is there an access problem for healthcare in the US?

(00:20:46):
Absolutely.

(00:20:47):
Even with Obamacare, we have 28 million people underinsured or uninsured.

(00:20:52):
And oh, by the way, that number really hasn't budged in the 10 plus years of Obamacare.

(00:20:58):
Number two, quality of care.

(00:21:01):
Quality of care has to be addressed.

(00:21:03):
But again, you got to get the costs in line first and then we can address those things.

(00:21:08):
So I think it's a trickle down effect and we've got to get there.

(00:21:13):
And so, you know,

(00:21:16):
Well,

(00:21:16):
I feel I kind of feel that,

(00:21:17):
you know,

(00:21:19):
back to the aforementioned,

(00:21:20):
you know,

(00:21:21):
hospital execs.

(00:21:22):
I mean,

(00:21:22):
what I jokingly say as well is that,

(00:21:24):
you know,

(00:21:24):
name me one hospital exec that will stand up there and they'll talk about their

(00:21:29):
quality ratings and the new construction and the new gamma knife.

(00:21:32):
But,

(00:21:33):
you know,

(00:21:33):
nobody's talking about,

(00:21:34):
well,

(00:21:35):
I'm going to lower costs this year,

(00:21:37):
not even lower costs,

(00:21:38):
keep costs flat.

(00:21:40):
And no one's even doing doing that.

(00:21:42):
That's that's kind of one one interesting thing.

(00:21:46):
The other bit is that I feel like,

(00:21:49):
to your point,

(00:21:50):
the ACA plans,

(00:21:52):
and I noticed this very early on,

(00:21:54):
the ACA plans,

(00:21:55):
do we do a renewal for a client?

(00:22:00):
bronze plan, a silver plan, whatever it is, and the premium might go up, let's call it 10%.

(00:22:06):
But then the deductible would also go up 10% and the out-of-pocket max would go up 10%.

(00:22:13):
So the real implied increase wasn't 10%.

(00:22:16):
Really,

(00:22:18):
if you had kept the deductible and the out-of-pocket max the same,

(00:22:22):
those plans would have gone up 15%.

(00:22:26):
So and it's it's been this this death spiral, you know, ever, ever since.

(00:22:31):
Yeah.

(00:22:32):
And you see you see the charts.

(00:22:34):
I see all these wonderful charts that get put out there.

(00:22:37):
You know,

(00:22:37):
the the inflation of wages,

(00:22:40):
this and then health care up at the top and all of those health care charts that

(00:22:44):
you show,

(00:22:45):
which are way above and are making a good point.

(00:22:48):
They are about premium.

(00:22:50):
They're not talking about overall costs.

(00:22:54):
And so when we look at the cost shifting that we have done between the employer and

(00:23:01):
the employee or the member,

(00:23:03):
it is massive.

(00:23:05):
And that's what's going to cause

(00:23:07):
the revolution because people are getting to the point where they literally can't

(00:23:14):
afford healthcare.

(00:23:16):
And that's a problem.

(00:23:18):
And we see- And by the same token,

(00:23:20):
Larry,

(00:23:21):
when you look at,

(00:23:22):
and I've done a lot of research over the last couple of years and gotten intimate

(00:23:27):
knowledge of the payer mix that hospital systems work with and employer groups,

(00:23:35):
disproportionately bear the brunt of the pain.

(00:23:38):
They're paying on a normal contract a normal contract.

(00:23:44):
with any of the major BUCAs,

(00:23:46):
large insurance companies,

(00:23:50):
they're paying two and a half times what Medicare is paying that same provider for

(00:23:55):
that same procedure.

(00:23:57):
And no one really,

(00:23:58):
no one,

(00:23:58):
employers don't even know that they've been taking advantage to this level ever.

(00:24:04):
I mean, no one talks about it.

(00:24:06):
Well, that's where I define it as the culprits in health care.

(00:24:10):
And who are they?

(00:24:12):
You know, it's kind of an incestuous thing because you're completely correct.

(00:24:18):
A small group employer

(00:24:20):
A, they don't get their experience, right?

(00:24:22):
Except in Texas where we forced a law.

(00:24:25):
But generally you don't get the individual experience.

(00:24:27):
So you don't even know what your population is doing.

(00:24:30):
What you hear about is pooling and you hear about,

(00:24:34):
you know,

(00:24:34):
overall book of business and all that.

(00:24:36):
And so that's number one.

(00:24:38):
Number two is you have no idea what the contracts are.

(00:24:44):
that are driving your cost and premium that they have with physicians and hospitals, whatever.

(00:24:51):
And we all know,

(00:24:52):
I mean,

(00:24:53):
we know because we're in the insurance industry,

(00:24:56):
the average PPO contract in 2024 was about 234% of Medicare.

(00:24:59):
The average PBM payment or cost was $134.87 PMPM.

(00:25:01):
Think about those numbers.

(00:25:13):
They're insane.

(00:25:16):
And look at the mix now.

(00:25:19):
So the insurance companies cannot pass on those kinds of costs to a 5,000 life case

(00:25:26):
because the 5,000 life case has visibility into those costs and they have leverage.

(00:25:33):
So who gets beaten up in that process?

(00:25:37):
It's those cases between 50 and 500 lives.

(00:25:42):
The ones that are fully insured, the ones, and maybe even it's 250.

(00:25:46):
And I don't want to get sued for this,

(00:25:50):
but I'm just going to say at one of the carriers I work with,

(00:25:53):
we did a study.

(00:25:54):
And what we found was that the profitability we had on small group versus

(00:26:01):
on ASO was a 310% differential.

(00:26:06):
Wow.

(00:26:07):
I'd never heard that before.

(00:26:08):
That's amazing.

(00:26:09):
Yeah.

(00:26:10):
So it's happening.

(00:26:12):
And in a way you can say, well, we need to blame the insurance companies.

(00:26:16):
No,

(00:26:17):
I think the insurance companies are at fault for sure,

(00:26:20):
because they're taking advantage wherever they can.

(00:26:23):
But you have to really go back to what's the cost.

(00:26:27):
And you can't have the cost of care be as high as it is.

(00:26:33):
You just can't, no.

(00:26:34):
The argument can be made,

(00:26:36):
Larry,

(00:26:36):
if we drop the cost of care,

(00:26:38):
will the insurance companies behave and not just grab that as profit?

(00:26:43):
That's where we gotta make sure that that doesn't happen.

(00:26:46):
But we have to drop the cost of care.

(00:26:48):
Well, it's really interesting.

(00:26:50):
So I was having a conversation with a friend of mine who works at one of the BUCA's.

(00:26:55):
And for the audience, we throw that term around BUCA.

(00:26:59):
BUCA generally stands for any of the Blue Cross Blue Shield Networks,

(00:27:05):
UnitedHealthcare,

(00:27:06):
Cigna or Aetna.

(00:27:08):
We use that term BUCA to sort of like put them all in a bucket.

(00:27:12):
But I was talking to this person and they were saying that

(00:27:16):
And I hadn't even heard of it before until about six months ago.

(00:27:19):
It's the California Office of Healthcare Affordability.

(00:27:24):
And these folks are, I think, part of California Health and Human Services.

(00:27:29):
And they have put in some new guardrails that are requiring health systems to limit

(00:27:38):
their annual expense increase

(00:27:41):
by really low single digits.

(00:27:44):
We're looking like for the next year of 2026, I think the number is 4%.

(00:27:49):
And this particular BUCA, they said, well, we're all in.

(00:27:54):
We want to support that activity because if we can keep the hospitals in check and

(00:27:58):
not raising their cost structure,

(00:28:01):
then we have a point to talk about.

(00:28:04):
Interestingly enough,

(00:28:05):
I found out a couple of weeks ago,

(00:28:07):
California Hospital Association is suing the California Office of Healthcare

(00:28:12):
Affordability to eliminate that cap.

(00:28:17):
I didn't read all the details, but to do away with that at least 4% for the first year.

(00:28:22):
You are completely correct.

(00:28:24):
I'm intimately aware of it.

(00:28:26):
And yes, they are suing them because they don't want that to happen.

(00:28:30):
But

(00:28:31):
You know,

(00:28:32):
Vinny,

(00:28:32):
I'm going to say this and I hope it doesn't shock your audience,

(00:28:35):
but the answer to this problem is not nibbling around at the edges like this.

(00:28:42):
I applaud people for trying and it's great.

(00:28:46):
But,

(00:28:47):
you know,

(00:28:47):
unless you got a whole bunch of piranhas that can literally strip it down to the

(00:28:52):
carcass very quickly,

(00:28:53):
this nibbling doesn't work.

(00:28:56):
We have the answer right in front of us.

(00:29:00):
And it's been there since 1963.

(00:29:04):
And we have to take advantage.

(00:29:07):
We have a national PPO, for gosh sake.

(00:29:11):
Let's use it.

(00:29:13):
Medicare exists, it is there, it's a standard.

(00:29:17):
Everybody prices to it and everybody can.

(00:29:21):
And I'm not suggesting,

(00:29:22):
let me say very quickly,

(00:29:23):
that we go from 240% of Medicare down to 100% of Medicare because the hospitals are

(00:29:31):
correct.

(00:29:32):
They'd go bankrupt and we wouldn't be able to treat people.

(00:29:35):
But what I am suggesting is

(00:29:38):
You know, in 2024, we spent nearly $20 billion in PPO access fees.

(00:29:45):
You want me to repeat that?

(00:29:47):
Do you know how much money that is?

(00:29:49):
It's ridiculous.

(00:29:51):
Let me add to it my second favorite.

(00:29:54):
We spent $15 billion on direct-to-consumer drug advertising.

(00:30:01):
There are only two countries in the world that allow drug advertising, us,

(00:30:06):
And New Zealand.

(00:30:08):
And you can't blame them because most of them are kind of a little bit drunk and

(00:30:11):
they don't have a big population.

(00:30:12):
God bless them.

(00:30:13):
And they make a lovely Sauvignon Blanc.

(00:30:16):
And they do make a great Sauvignon Blanc.

(00:30:20):
So we shouldn't be doing that.

(00:30:22):
You take just those two.

(00:30:25):
You're talking nearly $40 billion that is just being thrown away.

(00:30:31):
And my point is, and when my book is finished, I will lay all this out.

(00:30:36):
But the reality is you can do a step down process to bring us closer to

(00:30:44):
a program that allows for proper costs.

(00:30:48):
And it's on both the physician and the hospital side.

(00:30:51):
We can do both.

(00:30:53):
And most people haven't paid attention to how well our physician groups have been

(00:30:59):
moving their costs in the right direction.

(00:31:02):
I mean, we in California today, Vinny, have some IPAs that are contracted at

(00:31:09):
One hundred and twenty hundred and ten percent of Medicare, which is fantastic.

(00:31:13):
Right.

(00:31:13):
But find me a hospital system.

(00:31:16):
Well,

(00:31:16):
you know,

(00:31:16):
and this is this is you raise a you know,

(00:31:18):
first of all,

(00:31:19):
I couldn't agree with you more.

(00:31:21):
I that's where my head has been for the last year in that general general place.

(00:31:28):
But going from,

(00:31:30):
you know,

(00:31:30):
where we're at to that,

(00:31:32):
you know,

(00:31:33):
I'll just say it out loud,

(00:31:35):
Medicare for all as a solution is something that,

(00:31:40):
as you well know,

(00:31:41):
is anathema to everybody in the industry that is even makes their money.

(00:31:48):
The brokers would lose their minds.

(00:31:51):
The...

(00:31:53):
you know, the hospital systems would lose their minds.

(00:31:56):
But if there was that,

(00:31:57):
to your point,

(00:31:58):
a step down approach that could make it palatable over a 10 year period or whatever

(00:32:04):
the period is,

(00:32:05):
to make it happen, then I think we have something.

(00:32:09):
I mean, I can't, literally, I cannot wait to be on Medicare in this next year.

(00:32:14):
Right now,

(00:32:15):
my premium that my wife's business pays for me to be on her plan is $1,100 a month

(00:32:22):
for a $14,000 deductible plan,

(00:32:25):
okay?

(00:32:26):
I can't wait to be on Medicare and I'm not doing a Medicare Advantage plan either.

(00:32:29):
I'm going straight in on traditional Medicare.

(00:32:32):
Take it from me.

(00:32:33):
I've been on Medicare with a supplement,

(00:32:37):
and I'm telling you,

(00:32:38):
Vinny,

(00:32:38):
it is the best experience I've had in my entire life.

(00:32:43):
Now, I'm healthy, hallelujah, but...

(00:32:46):
You pay nothing.

(00:32:48):
It's unbelievable.

(00:32:50):
And your wife, my wife, my wife, I pay for her on on E.C.A.

(00:32:57):
eleven hundred and seventy five dollars a month for a really trashy Blue Shield plan.

(00:33:02):
It's not even a plan.

(00:33:03):
I mean, it's not even insurance.

(00:33:05):
I mean, it's not.

(00:33:06):
It really isn't.

(00:33:07):
It really isn't.

(00:33:08):
But I mean, I put up a quick post this morning on LinkedIn.

(00:33:12):
It was just a quick explanation of what an annual out-of-pocket maximum is,

(00:33:17):
because most people don't even know what that is.

(00:33:21):
But I think what's interesting to me is,

(00:33:23):
and this has been my take on sort of the LinkedIn ecosystem for a while now.

(00:33:29):
And I really appreciate you liking a lot of the things I post and you commenting on my stuff.

(00:33:35):
And I'm really thankful for you.

(00:33:36):
When you do that,

(00:33:39):
I feel like,

(00:33:41):
you know,

(00:33:41):
we've we've gotten to a point where there's a lot of really,

(00:33:46):
really,

(00:33:47):
really smart cooks in the kitchen.

(00:33:49):
A lot of smart people abound.

(00:33:51):
I was having a skin cancer, you know.

(00:33:57):
While I'm getting sliced and diced, I'm talking to the doctor.

(00:33:59):
He's asking me questions about the insurance business.

(00:34:02):
You know what my doctor knows?

(00:34:04):
He knows how to cut out a skin cancer.

(00:34:06):
He doesn't know any of the business related pertaining to insurance.

(00:34:12):
And you look at people,

(00:34:14):
pundits and all these other people who throw their information out on LinkedIn,

(00:34:19):
they know their little slice of money.

(00:34:23):
I like when people who have never been a broker start talking like they know what

(00:34:27):
it's like to be a broker or whatever it is.

(00:34:29):
And so you just said about,

(00:34:32):
you know,

(00:34:32):
potential of a Medicare for all solution is probably the most sane thing I've heard

(00:34:37):
in the long time.

(00:34:40):
I'm sorry, I didn't hear your last comment.

(00:34:42):
I said that what you said about the Medicare for all solution was probably one of

(00:34:46):
the most sane things I've heard in a long time.

(00:34:50):
And again, it doesn't have to be Medicare.

(00:34:52):
You see, I am working on a book.

(00:34:55):
So let me just say that.

(00:34:57):
And if I get it finished,

(00:34:59):
it'll be very interesting because my book is going to be a little different than

(00:35:02):
the ones that are out there.

(00:35:04):
Everybody has a book about all the problems in health care.

(00:35:08):
And don't get me wrong.

(00:35:10):
We all need to be educated on the problems in health care.

(00:35:14):
My book's primary focus is going to be a roadmap on how to fix it.

(00:35:19):
I'm tired after 46 years of people talking about how broke it is and nobody coming

(00:35:26):
up with a comprehensive solution.

(00:35:28):
Now, let me say quickly,

(00:35:30):
When I publish it, I'm going to be hated.

(00:35:32):
I'm probably going to have to hide somewhere.

(00:35:35):
And it is going to tell the truth.

(00:35:39):
I'm throwing my hat in the ring to help you.

(00:35:41):
I'm happy to be a reviewer if you have any interest in me reviewing it.

(00:35:46):
I'm going to send you the manuscript when it's ready.

(00:35:48):
Actually, I have three or four people that I value their opinions and I will.

(00:35:53):
But let me say this.

(00:35:54):
I think the solution side of the fence is

(00:35:57):
is where we need to now start to focus.

(00:35:59):
Because I keep saying this, you know, everybody says national health care will never happen.

(00:36:05):
American people will never put up with it.

(00:36:07):
Well, you're right and you're wrong.

(00:36:11):
If you get to the point where the cost of

(00:36:14):
a private sector healthcare policy is more than what it would cost to have that

(00:36:21):
payroll deduction out of your Medicare,

(00:36:24):
if you will,

(00:36:25):
payroll deduction,

(00:36:27):
guess what?

(00:36:28):
Americans are going to start paying attention because it's not more costly.

(00:36:33):
And we can't make the old-fashioned argument about

(00:36:37):
Oh, well, if you're on Medicare, you never get seen by a provider.

(00:36:41):
That's crazy.

(00:36:42):
Actually, private health care patients probably are at the back of the line in some cases.

(00:36:48):
So that statement's not true.

(00:36:51):
I am not an advocate for national health care.

(00:36:54):
I think that is a mistake.

(00:36:56):
And here's another fallacy people don't pay attention to.

(00:37:00):
Those OECD nations that we compare ourselves to,

(00:37:05):
here's a little fact most people don't pay attention to.

(00:37:08):
They all have private and public health care.

(00:37:13):
All of them.

(00:37:15):
You know, people say, oh, well, there's a national health care system in the UK.

(00:37:18):
Yes, there is.

(00:37:19):
But there is also a very thriving set of private practice work as well.

(00:37:25):
Same thing in Canada, same thing in Japan.

(00:37:27):
Germany probably has one of the best private public mixes we've seen.

(00:37:34):
So I'm in favor of us keeping private and public.

(00:37:38):
All I'm saying is let's make the adjustments to the private sector side so that we

(00:37:45):
can stop,

(00:37:45):
first of all,

(00:37:46):
cost shifting between,

(00:37:48):
big cost shifting between Medicare and private sector.

(00:37:52):
That's what hospitals do.

(00:37:54):
And then between employers and the members, we got to stop that.

(00:37:58):
I mean, I got in a discussion the other day, and you like this one, with somebody on a PBM.

(00:38:04):
And they were talking about rebates versus non-rebates.

(00:38:08):
And the first thing I said was rebates are ridiculous.

(00:38:11):
They should be outlawed.

(00:38:12):
There's no reason for them in the first place, in my opinion.

(00:38:16):
But even worse than that, here's a piece of rebates nobody pays attention to.

(00:38:21):
So you're a big company.

(00:38:22):
You sign up with one of the big three and you get this wonderful rebate arrangement.

(00:38:27):
Yeah, yippee-doo.

(00:38:28):
And you're at 82% of AWP,

(00:38:31):
which is,

(00:38:31):
of course,

(00:38:32):
a completely invented valuation process by the big three.

(00:38:38):
And at the end of the year, you get a massive check for $3.5 million.

(00:38:42):
Yay.

(00:38:44):
Is that fair, Vinny?

(00:38:46):
How many companies get a rebate check and turn around and give back to the members

(00:38:54):
some of the money they spent during the year?

(00:38:58):
Nobody,

(00:38:59):
we look far and wide and nobody's doing that,

(00:39:02):
which of course is why I love the fact that there's now a PBM out there doing

(00:39:07):
immediate rebates,

(00:39:08):
right?

(00:39:10):
Absolutely.

(00:39:10):
And Mark Cuban has begun to take up this conversation in the last couple of weeks

(00:39:16):
about that very topic.

(00:39:17):
And it's interesting to watch him

(00:39:22):
Wade into the game,

(00:39:23):
because now as he weighs into the game and talks about rebates and talks about or

(00:39:27):
lack thereof and talks about,

(00:39:30):
you know,

(00:39:31):
fiduciary responsibility of organizations,

(00:39:36):
I think fiduciary responsibility is something that we're only at the tip of the

(00:39:40):
iceberg,

(00:39:41):
because,

(00:39:41):
you know,

(00:39:41):
I feel like,

(00:39:42):
you know,

(00:39:43):
you and I.

(00:39:45):
you and I understand the behind the scenes stuff that goes on and everybody else is

(00:39:52):
just watching the movie,

(00:39:54):
right?

(00:39:55):
And there's so many moving parts and so many hands in the till,

(00:40:00):
But I feel like there's so many areas.

(00:40:02):
And if the fiduciary responsibility angle starts to take hold in corporate America

(00:40:08):
and employees start to rise up a little bit and start asking the right questions,

(00:40:14):
then we might start to see a change in the conversation around all this.

(00:40:19):
I think you're right on target.

(00:40:20):
And I'm paying attention to some of the big lawsuits that are out there now,

(00:40:24):
Wells Fargo,

(00:40:25):
et cetera.

(00:40:26):
And the outcome of those is going to set a precedence

(00:40:30):
that will then trickle down eventually into other employers.

(00:40:34):
But I also have to say this, and please don't be hurt by this.

(00:40:38):
I think CAA also has to be brought to bear on the brokerage community.

(00:40:43):
I'm just... Oh, dude, I'm all over that.

(00:40:46):
I completely...

(00:40:49):
Don't get me.

(00:40:49):
That's a whole other episode, Larry.

(00:40:52):
Yes, I agree.

(00:40:53):
It could be.

(00:40:54):
That's a whole other episode.

(00:40:55):
I mean,

(00:40:55):
I take no umbrage to criticizing the brokerage community for their just general

(00:41:06):
self-serving behavior.

(00:41:07):
I mean, and I lived it.

(00:41:09):
I saw it firsthand and haven't even gotten warmed up to that topic yet.

(00:41:14):
So

(00:41:15):
Yeah,

(00:41:16):
and I think all of us have to recognize that no one party is responsible for where

(00:41:23):
our healthcare system is today.

(00:41:25):
I used to give a speech quite a while back in the early 2000s,

(00:41:29):
and I talked about healthcare and said that visually,

(00:41:33):
this is what healthcare looks like.

(00:41:35):
Here are the five main constituents, and this is how they operate, completely independent.

(00:41:41):
And this is what healthcare should look like.

(00:41:44):
And that is the challenge.

(00:41:46):
The challenge is everybody is going to have to change to make this work.

(00:41:52):
So I've been picking on hospitals and the price of healthcare, but employers are responsible.

(00:42:00):
Members are responsible.

(00:42:02):
People have to start taking responsibility for their personal health.

(00:42:06):
They have to start taking responsibility for their behavior and they need to build plans

(00:42:12):
that are built that way.

(00:42:15):
Brokers have to take responsibility for what they're doing and how they're advising

(00:42:20):
their clients and where those clients are actually going and the success and

(00:42:26):
outcomes they're having.

(00:42:28):
And the government needs to be responsible.

(00:42:31):
The government has to step up as well.

(00:42:33):
They're responsible.

(00:42:34):
So every constituent in the healthcare system

(00:42:38):
I'm going to pick on in my book and I'm going to pick on very vigorous.

(00:42:44):
Well, I would encourage you.

(00:42:46):
So my inaugural podcast episode,

(00:42:49):
actually technically episode number two,

(00:42:51):
was with a woman named Judith Kunish.

(00:42:54):
She just wrote a book called The Center of the Star.

(00:42:57):
And when you put your hand up with the five things,

(00:43:00):
She basically talks about a five pointed star and she comes out of the of the

(00:43:05):
health care industry as she was a nurse.

(00:43:08):
I think she she worked.

(00:43:09):
She might have worked for Aetna.

(00:43:11):
She worked for one of the large insurers back east in Connecticut.

(00:43:15):
And so she wrote this great book.

(00:43:16):
And I think you should you should take a look at it because it's an interesting

(00:43:19):
model for everybody.

(00:43:22):
For me, it was 200 pages of a quick master's degree in what goes on in the healthcare system.

(00:43:28):
She and I talked about it.

(00:43:29):
I jokingly said,

(00:43:30):
well,

(00:43:30):
it looks like the one thing you missed was the brokers because the brokers weren't

(00:43:33):
even mentioned.

(00:43:34):
So she appreciated we had a good talk about that.

(00:43:37):
And so,

(00:43:37):
no,

(00:43:38):
I applaud that you're writing a book and you may have to buy protection for

(00:43:42):
yourself,

(00:43:43):
but that'll be okay.

(00:43:45):
Well, it'll take some time because I'm still working.

(00:43:48):
And as you know, I'm working on my passion project.

(00:43:51):
And that now is being soft launched.

(00:43:54):
And I'm hoping in its little way, it's going to make an impact also in the healthcare space.

(00:44:01):
Listen, you're one of the good ones.

(00:44:03):
You know the industry, the ins and outs.

(00:44:06):
As we close,

(00:44:08):
I always ask,

(00:44:09):
I made an allusion to New Zealand Sauvignon Blancs,

(00:44:13):
but I always ask my guests,

(00:44:16):
first of all,

(00:44:16):
whether you'll come back.

(00:44:17):
I hope you will.

(00:44:19):
I will.

(00:44:20):
And number two, what's your favorite wine?

(00:44:22):
Do you have a favorite wine or favorite region?

(00:44:24):
Do you even drink wine?

(00:44:25):
I'm just kind of curious because I have my own little passion project,

(00:44:28):
which is an Instagram called Vines with Vinny.

(00:44:31):
So I'm always interested in people's take on the wine on the wine world.

(00:44:36):
We are wine lovers for sure.

(00:44:38):
You know, California, in my opinion, has changed the world on the wine front.

(00:44:48):
I tend to be, I started out very much a cab guy and I still am.

(00:44:55):
I still love a robust, wonderful Cabernet.

(00:44:58):
But over the years, I think I've become intrigued by a lot of the blends that are there.

(00:45:06):
And one of my favorite wines today is actually out of Paso Robles, a winery called La Venture.

(00:45:15):
There's a little French mafia revolution going on in Paso Robles, if you're unaware of it.

(00:45:22):
And yeah, and they are producing some magnificent wines.

(00:45:29):
What was the name of the winery?

(00:45:31):
La Venture.

(00:45:35):
They actually were the first winery in Paso Robles to get a hundred point rating

(00:45:42):
from Wine Spectre.

(00:45:45):
He built a lovely wine call for her.

(00:45:48):
I don't think you can get your hands on it anymore, but it was magnificent.

(00:45:53):
But he has just a plethora of wonderful wines and

(00:45:58):
What's happened is a lot of Frenchmen have followed him now into Paso Robles,

(00:46:03):
and there are probably five,

(00:46:05):
maybe six wineries there now that I would put up against

(00:46:11):
anything in Napa.

(00:46:12):
Oh, no, no.

(00:46:13):
I agree with you.

(00:46:14):
Between Paso Robles and the Santa Rita Hills for Pinot Noir, I mean, come on.

(00:46:20):
I mean,

(00:46:21):
the production going on in the Central Coast area is from Paso Robles South is

(00:46:27):
nothing short of remarkable.

(00:46:28):
I mean, it's really high class stuff.

(00:46:30):
It's great.

(00:46:31):
And food is following as it always does.

(00:46:34):
They have now

(00:46:35):
Can you believe Paso Robles now has three and soon to be four Michelin star restaurants?

(00:46:42):
10 years ago was a McDonald's town.

(00:46:45):
My wife and I were on vacation in Sicily last year.

(00:46:50):
We actually ran into George Dow just after he sold his winery for a billion dollars.

(00:46:56):
They're doing okay in Paso Robles.

(00:47:00):
Larry, I want to thank you.

(00:47:00):
And bought 250 acres.

(00:47:05):
And he and I have known each other a long time.

(00:47:08):
He wasn't in the wine business.

(00:47:10):
And he's now dedicated 75 acres because Dow is above him.

(00:47:15):
And they loved his soil and said,

(00:47:17):
if you put it in,

(00:47:18):
we'll buy every single grape that you can produce.

(00:47:22):
And so now he's in the wine business, even though all he was doing was drinking wine.

(00:47:29):
Well, listen, Larry, I think we covered a lot of interesting topics today.

(00:47:32):
There's thousands of interesting more topics we can cover.

(00:47:36):
Keep me abreast on the book.

(00:47:37):
I'm happy to help you give me some feedback on that as it develops.

(00:47:42):
And I just want to thank you for being here today.

(00:47:45):
Thank you for having me.

(00:47:46):
Always great to talk to you, Vinny.

(00:47:48):
I appreciate it.

(00:47:51):
This podcast reflects the personal views of the host and guests,

(00:47:55):
not their employers or sponsors.

(00:47:58):
See you next time.