Benefits Update with Ryan Warner

I got to get a clock. Welcome to Risky Business Commercial Insurance with Butler Byers. This is Paul Martin, the host of the show, and joining me in studio today, Colin Rooke, the commercial risk reduction specialist with Butler Byers. And also we’ve got joining us, Ryan Warner, who is a specialist in the area of benefits plans. And since we are, for the most part, targeting this at the commercial side of insurance, Warren… or sorry, Ryan, it’s very timely to have you come in and join us because that’s pretty much all you ever do is deal with HR departments and companies getting benefits plans in place.

And so Colin, I think you wanted to kind of do a mid-year catch up on this and just sort of say what’s going on in the world of benefits plans. And Ryan, we haven’t talked to you for I would guess three or four months or something. So it’s pretty timely to come back. Now there’s a couple of things that are capturing leading the news stories these days, the newscasts, so maybe we’ll just dive into those right off the hop. And those are things like inflation, so is inflation doing anything to… what are you hearing in that? And I guess really just generally, what are business owners asking you right now? When you go talk to your clients or prospects, what are the questions, Ryan, that they’re throwing at you? What’s top of mind for them right now?

Well, thanks for having me first of all. Yeah, I mean there’s a lot of, I would say waterfall effect with inflation and the cost of everyone’s goods and business rising inherently, services that folks claim through their benefit plans are seeing everything from the paper they put in their printer to the cost of keeping the lights on. Everything seems to be going up, so that just naturally rolls downhill. Ultimately, the patients are the ones that are going to incur it at the end. So yeah, we are seeing practitioners put up the costs of their services. We’re seeing the dental associations across Canada continue to increase the fee guides and medications, certainly not getting any less expensive. And that’s one of the key hot button topics that we’re speaking to business owners all the time about.

That leads me to a couple of questions. One is, what causes it? Secondly, what do you do about it? So let’s start talking about the cause. I mean, obviously inflation is, as you said, it’s very insidious. It’s in every aspect of the world. What kind of increases are we seeing on cost of prescriptions, the cost of healthcare related services, everything from, I suppose, dental care to the chiropractor, to the massage therapist? I’m sure you’re seeing all of those. What kind of numbers are you seeing come up with? Are they fitting the 8% or 3% inflation that we hear about?

Yeah, that’s a bit of a loaded question. It’s a little bit all over the map. I don’t know. I can give you one specific answer. Every industry that comes through a benefits plan is impacted a little bit different. I wouldn’t expect to see massage therapists as an example, putting up their fees as much as I have seen dentists putting up their fees. So it is a little bit situational.

Medication wise, I think that’s where we’re seeing over the last several years, not just post pandemic, but the cost of medications just keeps skyrocketing it seems. The cost of the investment of the big pharma that they’re putting in to get a medication to market and the research and development that goes into that, and we haven’t heard the term in a while, but the patent cliffs and the whole idea that a big pharma can come out and release a medication that’s going to do some wonderful thing, but then they charge an absolute fortune for it to recoup all the money that they put in. And no question, they’re trying to make some money too. So it’s challenging for everyday folks and certainly for employers that have to digest the rising costs of premiums from these plans.

Yeah, I guess that’s really where this leads me to is if you’re an employer, so you’re a business owner or you’re a manager or CEO of a company and you’re listening to this and what are their responses? Is it just, “That’s the price of cabbage and we just pay more,” or do they say, “No, we got to look at the plan and we got to see where we can cut this thing? Do we start to trim back on benefits?”

There’s a lot of strategy involved. I think some of it is inherently a bit of a philosophical approach of what is the employer capable and wanting to do for their staff. We’d love to cover the cost of absolutely everything and make sure everyone has the medications that they need. And unfortunately, there’s still a cost associated with it. And when we start talking business case and dollars and cents, employers have to make challenging decisions on how they’re going to structure this program. And are they just going to open-end cover it?

I think the larger the employer, the more likely it is they have the budget or the ability to digest some of those high costs. For small to mid-size businesses, I mean, a couple of big ticket medications on a plan can really hurt the long-term sustainability of a premium. So it’s not something that’s going to hit them all at once. And this is more of a technical conversation that we’d need to have, but we can certainly help employers understand how to take on a level of risk they’re comfortable with, work with an insurer to see what an insurer’s willing and able to take on. And then ultimately, there’s the provincial programs that come to play, certainly here in Saskatchewan, you do have a quality program there.

Colin, and I haven’t brought you in on this conversation. Maybe you want to jump in. I don’t know if some of the things that Ryan’s been outlining here, if that sparks any questions from you.

No, I think it’s a good update to have just we spent a lot of time on this show talking about the… Well, I mean inflation is a topic that’s top of mind for everyone, and we talk about the impact on commercial insurance and the impact on just global warming and catastrophic losses like the wildfires. So it’s good to touch base with Ryan and just say, “Okay, it’s not all just commercial insurance focused.” We are seeing cost increases on the benefits side. And I guess we’ve touched on this too, but I’d be curious to know more sort of tips and tricks or what can we do about inflation? Any advice Ryan would have for anyone listening, saying maybe I don’t want to decrease the spend, or maybe you’ve got some tips on how to explain the rising costs or how an employer can explain that back to the plan members who are ultimately paying, that kind of thing.

Sure. Yeah. I say, you know what? I think when I’m talking to employers on a day-to-day basis, the first couple things I’m trying to understand from them, and perhaps more importantly trying to help them understand is how these programs are structured, how the cost of a big ticket medication impacts their premiums and what they are capable of stomaching long-term. And then we can help them tailor the program in such a way that, again, I’m talking about a small business owner, it could be really challenging for a small business owner that’s paying someone $50,000 a year to also cover $150,000 medication. So when we’re talking pure business sense, it is a challenging conversation to have. There’s ways to tailor a program with certain providers where you can tie in directly to provincial programs. That becomes a bit of a trying to kick the can to the other team and try to get somebody to pay for it. But this is where we really have to understand each other, how the program works, and what they want to achieve for both their budget and their staff.

This raises I guess, some very salient points around that, and I want to dig into them a little bit, but I’m going to digest the $150,000 number first and then we have to take a little break while I’m doing that. So if you don’t mind, just stand by. We’re going to take a short break. We’re going to pop back here and we’ll pick it up there. You’re listening to Risky Business Commercial Insurance with Butler Byers. My guest today, Colin Rooke and Ryan Warner. Ryan is the benefits specialist at Butler Buyers. We’ll be back right after this.

Welcome back to Risky Business Commercial Insurance with Butler Byers, Paul Martin here, your host, and joining me today, Ryan Warner, the benefits specialist at Butler Buyers and Colin Rooke, the commercial risk reduction specialist at the firm. And Ryan, before the break, you tossed out $150,000 as a drug cost that may… is that really a valid number? That is the kind of things employers sometimes are faced with or plans have to figure out how to deal with?

Unfortunately, that can sometimes even be conservative. It’s not out of the question now to see certain cancer medications in the 25 to $50,000 range, you get into rheumatoid arthritis and you can be getting up into the 50 to $80,000 range. Hepatitis C, fantastic cure. There’s a one year treatment program now for someone battling that, you’re looking at about a hundred [inaudible 00:10:35] change. So there’s very, very expensive medications that go well beyond well into the six figures.

And it is challenging. These plans, these benefit plans, if you’re not paying attention, they can pick them up. And that does have a long-term effect. The way these plans are designed, the insurer has a pool, that pool collects from all of their clients across the board, and that pool is set up in such a way to stomach the majority of these claims. However, if you’ve got an employee that has one of those large cost medications, other insurers are going to be less inclined to want to invest in that business, are going to be less inclined to try to attract a client that’s ultimately got sizeable pool benefits.

So it does pigeonhole the client a bit to an extent where they all of a sudden become “stuck” with the existing insurer and let’s call it what it’s the leverage on the company kind of goes out the window and premiums will start to be affected because hey, nobody wants to have those large claims, but they exist and people need those medications. So that’s why it’s so important you tie in properly with provincial plans and speak to drug manufacturers and try to pick up coverage in a variety of places.

Colin, you were nodding there. I’m just curious, is that something that you bump into in your day-to-day life, that there are companies here in Saskatchewan that will find themselves facing those kinds of challenges?

Yeah, it is. And I think part of our… For example, if we’re working with a commercial client that’s going through our risk reduction program, part of the risk assessment we’ll do is we’ll touch on… we’ve talked about other employee related issues and we will get into the benefits plan overall and really the philosophy around it. So what we’re not doing is talking about plan mechanics, but what are you hoping to achieve with this plan? Is that communicated effectively? Are you aware of all the ins and outs? How good would you say your education is? How much time are you spending educating the employees? Would you say they have a firm understanding of where the cost drivers are? And could the plan members essentially, if I asked them, would they give the same answers back? And so that really starts the conversation around, and Ryan touched on it, does the plan do what you want it to do, really what you think it should be doing?

And also how you tie in the value of that plan back to the employee. So if you’ve got a group of individuals that don’t understand the plan, therefore don’t see the plan value, and then costs are increasing due to drug costs, et cetera, and inflation, you really have an unhappy group. And so education is just so important. So everyone at the table understands where the money goes and why. And for those often younger plan members that say, “You know what? Not for me, I don’t want to spend the money,” the conversation with the high cost drug is just such an important one to have. What are you going to do if this happens to you? And then suddenly you’re a completely undesirable plan member. So education is just so important.

There’s one that comes to mind in these conversations. Certainly I’m seeing it in the business news coverage is Ozempic. We’re seeing all of these ads on TV and all sort of stuff that’s popping up as an issue in benefits plans. Ryan, can you walk me through that or is this coverage actually on a story that’s a real story.

Yeah. You know what? This is a challenging conversation. I think there’s two very different arguments that come from completely opposite ends of the spectrum on this one. So I will say the reality of Ozempic initially and the benefits it has for diabetic patients medically necessary is kind of the key ingredient there. The medically necessary folks are going to get it covered through plans. Insurers are really cracking down on the whole weight loss side of things and where it’s not deemed medically necessary.

And that’s the distinction with really any medication is if a benefit plan plan’s going to pick it up, it’s because someone needs it. Now, this is where I guess the argument gets a little fuzzy for me in that… and I’m not going to pretend to be a doctor, I should make that a caveat, but if someone’s taking a medication to improve their overall health and lose weight, is that going to protect them from potentially additional medications down the road? So it’s hard to pull the plug on things that may actually prevent future challenges. At the same token, if it’s not deemed medically necessary, that is the way our system’s set up to prevent folks from getting that coverage.

Well, that’s just it with this one, isn’t it? I mean, it’s a diabetes drug, but the byproduct is weight loss and a lot of people have hooked onto it as a weight loss drug even though the diabetic thing has become sort of secondary or ancillary for them. But this has become a very popular drug, hasn’t it? I mean, there’s no doubt, a lot of demand to pay for this one.

It has. Yeah. I mean, off the top of my head, I’m trying to think of a couple other alternatives that are out there. I will say I also believe it’s pretty early days from the information I’ve been seeing where there’s questions around the sustainability of what it’s doing for people on the weight loss side of things. Is it potentially causing other challenges?

I mean, I think about myself and all the healthy eating and trying to be active and going about it the more mainstream route rather than taking the medication. I realize that’s not necessarily doable for everyone, but I can see why it’s become such a hot button item and why the insurers are tiptoeing around how to deal with it. I mean, they’ve essentially put their… drawn the line, so we can’t cover the folks that are not medically required, but I have an argument to say they maybe should.

Well, we’re down to just a minute left, and maybe I just want to kind of tie a bow around this thing, and if I’m hearing you, that there’s just simply no substitute for business owners talking to people like you and just engage in the conversation, figure out how the changes… there always are changes, and so what do they mean? Is that a fair description?

I think so, yeah. I think about our role as trying to be on the front line. We’re trying to digest information that they may not otherwise have access to. We have an approach to the strategy that is the living, breathing thing that is a benefit plan, and that’s our role is to help them achieve, as Colin said, what is it they want for their staff and for their business and for their budget.

Ryan, as always, very insightful. I want to thank you for taking the time to join us today. You’ve been listening to Ryan Warner, benefit specialist with Butler Byers and also in studios, Colin Rooke, the commercial risk reduction specialist with Butler Byers. Thanks very much for joining us and we’ll talk to you next time.