Health insurance's unseen points

The exterior of the Corporate Synergies Group Inc. building in Mount Laurel could not be more nondescript: vanilla office park, random trees.

But inside the health-insurance brokerage, it's different.

It's obvious that chief executive Eric Raymond, 51, of Bala Cynwyd, had to own his own business.

Otherwise, he'd have no place to display dozens of travel photographs, especially of South American monkeys. (Beats the standard hallway gallery of business patriarchs every time.)

The man is passionate - whether he's talking about the rain forest, which he helps preserve through a personal foundation, or health insurance. We asked him to talk about both.

Raymond: I'll tell you what happened just yesterday. I met with the chief of the Yawanawa tribe [in] the Amazon, in Brazil. He's an amazing person. I don't know how old he is, maybe 35. And he's studied in the United States. He's the first Amazonian chief to have a female shaman in his tribe - very progressive. He fought the Brazilian legal system to [keep] 200,000 hectares that they were taking away from him to build roads and soybean plantations.

Question: So you're giving him a grant? For what?

Answer: He needed some money to put together a fishery.

Q: Back to your day job, brokering and managing health insurance for medium-sized companies. Why are insurance costs so high?

A: One of the main reasons is that the individuals in America use a tremendous amount of health care, because we get sick more than we should.

And we get sick more than we should because a very high percentage of individuals don't know when they're sick. And so by the time they find out, it's very expensive and terrible on their lifestyle.

And the other reason is that people who know they're sick don't do anything about it. The difference in cost between a diabetic [who] takes care of himself [and those who don't] may be about $20,000 a year. So if you take an employer [with] 1,000 employees, 70 people have Type 2 diabetes. And 35 of them don't know they even have it.

Q: But in the meantime, while they don't have it, they're not costing the health system anything, right?

A: The fact they don't know they have it doesn't mean they don't have all these co-morbidities inflicting their system. Then half of the people that know they have Type 2 diabetes - who are going to lose their legs, who are going to go blind, who aren't going to be able to have sex - still don't do anything about it. So, say 50 people don't take care of themselves - at $20,000. Fifty times $20,000 - [that] costs that employer $1 million or more extra in health care, which they have to charge all their other employees, and themselves.

Employers spend $1.5 million, the second or third line item in their whole budget, without knowing how much the claims were. Insurance companies are not telling [them] enough to control costs.

Q: What kinds of things should they be telling them?

A: I used to say that if you want to reduce your health-care costs 80 percent, fire the 20 percent of your people that are sick. Now, it was a joke and you're not allowed to do that. Here's the amazing thing. When you analyze a company's claims in this view and you see that a giant portion of the claims [are for] 5 percent or 10 percent of the people. And then you go back just two years, [and] you say, "The claims were under $1,000 for these people."

The scary thing is that all of these companies have giant medical time bombs of people that are sick. Nobody discovered they were sick, and they could have.

Q: How?

A: When you get your blood test, does the insurance company actually get the results of your blood test? No. Or in general, no. Some have been sharp enough to do that. How can they do what they call disease management when they don't even know that you're Type 2 diabetes because they don't get the data?

Everybody's at fault in this system. The carriers are at fault for not saying [to employers], "We'll tell people that they are sick." We all need somebody to hound us to do good things for ourselves.

So when I ask employers, "Do you have any idea what percent of your people have had colonoscopies, have had Pap smears, have had mammograms, have had prostate tests? And they go, "No. I don't know. The insurance companies don't tell me that."

Q: Wouldn't it be a violation of employee privacy?

A: Well, to know it as a percentage for their whole company is clearly not a violation of privacy. But somebody should be on top of it. And the employers should know - wow - you mean to tell me that only 42 percent of my [eligible] employees have had colonoscopies? Well, if you're the employer, it's obvious what's going to happen.

Q: So what's the role of the broker in all this?

A: Brokers make a lot of money off these health-insurance products. They should earn [it]. It used to be that a broker might take 15 insurance companies [and have bid] them against each other. But now, instead of 15 carriers, you have three in the market - maybe four - if you're lucky. So what's the real role of the broker? You're not going to shop. The employer can do it himself. The real fundamental thing that we should do is to control your long-term costs.

Q: Your point is that it's actually a short window - two years. Of course it's a great investment if you have an employee for 10, 15, 20 years.

A: The rate of return is pretty high and you'll be able to get it in a year. There are programs and software and analysis tools to tell me who's going to have a greater than a 50 percent chance of being in the hospital in less than 18 months, based on history of claims, blood tests, and how you're taking your drugs.

Q: How do employees respond to this?

A: People are very smart. They know that health-care costs are going up and they welcome some of the information they can get about their own personal health, if it's communicated properly.