In our inaugural episode of the Health Guardianship Podcast, we had the pleasure of speaking with Alex Acosta, former Secretary of Labor, about the evolving landscape of healthcare and the challenges associated with employer-based insurance systems. We explored the roots of today’s healthcare system, its inefficiencies, and potential solutions that could revolutionize the industry.
Listen to the episode here: Unlocking Healthcare Reform
The Problem with Employer-Based Healthcare
A significant portion of Americans receive healthcare benefits through their employers, a structure that has its origins in World War II. As Secretary Acosta explained, wage controls during the war led employers to offer benefits to attract workers. Over time, this developed into the employer-based insurance system we see today. While effective in providing coverage, it has created unintended consequences, including a lack of flexibility for workers.
Many employees feel “locked in” to their jobs due to healthcare coverage. For instance, if someone with a sick family member receives a better job offer, they may hesitate to switch employers because they fear the disruption of their healthcare benefits. This not only stifles labor market fluidity but also restricts consumer choice, which is a key factor in promoting efficiency and innovation in healthcare.
Market Failures in the System
Secretary Acosta highlighted two major market failures in the current system. First, the complex structure of employer-based insurance introduces multiple layers of intermediaries—employers, insurance companies, and brokers—that often prioritize cost over patient care. This results in a system where individuals are not incentivized to seek high-quality, preventive care, focusing instead on immediate, cost-effective solutions that benefit employers in the short term.
Second, the lack of portability in healthcare further ties individuals to their employers. This system was not designed with patient choice or long-term health in mind, leading to a disconnect between the healthcare consumers need and what they receive.
A Solution: Increased Consumer Choice
The traditional employer-based model can coexist with other innovative approaches, such as association health plans, health shares, and even community or faith-based healthcare systems. These alternatives offer individuals more control over their healthcare, allowing them to choose options that align with their long-term health goals.
One compelling example is the use of association health plans, which Acosta helped introduce during his time as Secretary of Labor. These plans allow groups of small employers or associations, like the Chamber of Commerce, to band together to offer insurance to their members. Not only does this create economies of scale, lowering insurance costs, but it also enables portability, so individuals can carry their healthcare coverage across employers within the association.
By giving individuals the freedom to choose between traditional employer-based plans, association plans, or other innovative models, we can create a healthcare system that is more responsive to the needs of patients. For example, a small business owner or freelancer could benefit from a portable, affordable health share program, while a traditional employee might stick with their employer-provided plan.
Beyond “Sick Care”: Focusing on TRUE Preventive Health
A key theme of the conversation was the need to shift from a “sick care” system—focused on treating illnesses as they arise—to a true healthcare system that prioritizes prevention. Secretary Acosta shared the story of a friend with diabetes who, despite having access to medications and treatments, struggled to receive support for preventive measures like diet and exercise programs.
Dr. Daneshghari emphasized that employers, while well-meaning, often focus on getting employees back to work quickly, without considering long-term health. This short-term approach fails to address the root causes of chronic conditions, resulting in higher healthcare costs and poorer health outcomes over time.
By giving patients more choices and focusing on preventive care, we can create a system that better supports long-term health and wellness.
The Path Forward
As the healthcare landscape continues to evolve, it’s clear that innovation is needed to address the shortcomings of the current system. Association health plans, community health models, and increased consumer choice are all potential solutions that could empower individuals to take control of their healthcare.
These association health plans could then bake in models of holistic care like Health Guardianship in order to increase on-demand access to care, while empowering portability of an individuals coverage, regardless of where they work.
By putting patients at the center of the healthcare system and offering them real choices, we can move beyond the inefficiencies of the current system and create a healthcare model that works for everyone.
Episode Transcript:
Firouz Daneshgari: I'm, uh, delighted to introduce the guest of our podcast today, secretary Alex Acosta, uh, uh, former Secretary of Labor at, uh, Trump's administration. I have had the pleasure of, uh, interacting and learning from Secretary Acosta over the past almost two years, and [00:01:00] increasingly I've been impressed, uh, with not only The breadth and the depth of his knowledge, but also the innovative thinking that he has in terms of what are the most efficient way of moving the path forward through a more efficient health care.
So, with that, I'm going to ask Secretary Acosta to give us a little of a background and, uh, introducing really himself because I don't think I can do the justice.
Alex Acosta: Alex. Well, Dr. Daneshgari, uh, thank you for those words. And, uh, first be, uh, let me just say that, that it's a pleasure to be on this podcast with you.
Um, I read your book about a little over two years ago and was really struck by how much you want to innovate and change healthcare in this nation. I wish there were more physicians that were taking the risks, uh, that you take that, that were standing up against the system and saying, uh, for the health of my patients, we really need to change the way we provide, uh, not just medical services, but health [00:02:00] services.
Um, and, and so it's a pleasure. Um, you mentioned, uh, the, the Department of Labor. And I was Secretary of Labor. And what a lot of folks don't recognize is that the Department of Labor regulates so much of the health care system in the U. S. through employer provided health insurance. Many Americans, most Americans receive health care as an employer benefit.
And as a result, that comes under the Department of Labor's authority to regulate employer benefits. But that doesn't have to be the case. Um, that is, is. entirely the result of happenstance. And, and here's what happened. Um, back in World War II, the war board put controls and wages and put controls on prices.
And it said to employers, you can't raise wages and you can't raise prices. But employers needed workers. They needed people to come to work. Um, the war board had said, employer benefits are not wages, so [00:03:00] you can do whatever you want with the employer benefits. And all of a sudden employer benefits, which almost didn't exist, became the way that companies attracted workers.
And companies love this because it wasn't regulated by, by the war board. And at the same time, once an employee received benefits, they were locked in. They couldn't go to another employer. And so that is why the Department of Labor oversees, uh, employer benefits like health care insurance provided by employers, but that doesn't have to be the case.
Josh Taylor: one of the things that you had talked about is like that there are some market failures that we're starting to see when it comes to this by happenstance structure of insurance through the employer market. Um, what were some of your first indications when you were in your role of secretary [00:04:00] labor, uh, on those market failures?
Alex Acosta: Well, there's several, um, you know, this wasn't thought through this just developed as a, a workaround to the war board's restriction on wages, right? And at no point did someone sit and say, this is the way that Americans should pay for healthcare. So first and foremost, um, people are locked in the market for labor is, is.
Uh, not nearly as fluid as it should be because if I am working for a business and I get a better offer from another business, I have to think, do I want to change healthcare? If my child is sick or my spouse is sick, I have to change, I have to think, do I want to change my insurance right now? And so it prevents Americans from really going to the company that is best suited for them.
It locks them in. to, to an employer that they may not want to be at. Um, but the second part of it is it really creates two [00:05:00] levels of, of interference between the person buying healthcare and the person receiving healthcare. And in theory, the person buying healthcare should be the patient. When I go to see the doctor, I and the doctor should have a relationship, right?
But the problem is that my employer is paying the insurance company, which then pays The physician and the at no point in those two levels. Is there an emphasis on what I need and want? You know, the employer is trying to get the best deal for themselves in terms of low cost insurance that gets them what they need, the minimum that they need for their employees.
And then the insurance company is trying to get the best deal I can with the physician. And I, as a patient, I'm not involved in either of those. And so when I go to see a doctor, I'm not focused on price. I'm not focused on quality. I'm just seeing the doctor and hoping. You know that that I got lucky and got a physician [00:06:00] that's focused on me
Firouz Daneshgari: from a physician perspective, if I look at from a what I call the member and as you know, I don't call our members, uh, patients because not all of us are patients.
We all are consumers of healthcare throughout our entire lives from the time we are born until we leave this earth or live this body. Uh, uh, After ourselves, you know, after ourselves. Next stage is the family who has the most interest in my health, uh, and how healthy and productive I am, both in terms of longevity and mortality and so forth.
The next one should be my [00:07:00] employer, a person who basically I work for and therefore, although it was a, uh, maybe a, uh, an accidental occurrence, but nevertheless in the. Progression of who should have an interest in my health and my productivity sounds to me, uh, that is more logical that after my family will be my employer, you know, as a part of the bigger community.
Alex Acosta: Well, that's right. The employer does have an interest in in your health, but. One of the, you know, and employers try to do the right thing, but, but one of the, the issues that we face is that an employer doesn't have a long term relationship with you the way your spouse may or your family may. And so I think what it's led is a system where the employer is addressing the immediate sickness, right?
The employer is buying insurance that will. Get you back to work that will address your immediate sickness and your immediate [00:08:00] need, but the employer isn't really focusing on making you healthy and preventing diseases that will come into play in 10, 15 or 20 years, and so, you know, Josh, you mentioned the word choice and I think you're right on.
And I'll give you an example. Um, you know, a very good friend of mine has early stage diabetes. And he can get all sorts of prescriptions. He can get all sorts of treatments for it. What he can't get through his insurance is a program that puts him on exercise and puts him on a healthy diet and really monitors him.
Um, in truth, that program would probably be cheaper. Uh, it would keep him healthier in the long run. Um, but his employer provided healthcare insurance focuses on giving him the pill so he can stay healthy. And go to work now rather than I'm preventing much more serious illness in the long run because the employer doesn't really know if he's gonna Have [00:09:00] that employee in 5, 10 or 15 years.
Employers aren't thinking about your lifetime. They're thinking about, let's get you back to work now. That is not a knock on employers. That's just the business reality.
Firouz Daneshgari: you're correct that I think the issue of the short term versus the long term view of the [00:10:00] investment that the employer makes on the employee, uh, that needs to be considered.
Uh, that that also plays a role in this process. Josh, let's go back to the issue of the I think that what is wrong or the system, the dysfunction in the system. I think I disrupted that conversation.
Josh Taylor: you had mentioned, uh, portability and we talked a little bit about consumer choice, but the lack of portability is almost, um, an inherent flaw in the system by the way that healthcare evolved inside of our system.
I mean, if, Benefits were built by employers to keep talent, then by the very nature, they're still existing in this ecosystem to keep talent, meaning you aren't able to leave. And I wonder if your, your point about portability gets to the heart of, uh, this intersection between the employer's needs. Meaning they don't have a long term view of [00:11:00] the impact of your health, but that's okay because if you had somehow access to care that was fully portable and not connected to the employer.
Then the employer could still possibly reimburse you in that way, but it would be doing it in a way that was actually empowering your long term health as opposed to just focusing on this small tranche of time where you're working for that one employer. But maybe I'm taking a little too far.
Alex Acosta: Josh, just the opposite.
I think you're, you're right on point. And, and there are other solutions that, that could address this where you've got, if not the portability, you can, you're, you're not tied to the employer. And so there are incentives then to keep you healthy. Uh, for the long, long period of time. I am not saying we should, we should remove the employer as a provider of health care services.
Um, what I'm saying is that let's provide, let's have a system where there is choice, where a person can [00:12:00] get Healthcare insurance through their employer, where a person could get healthcare insurance through their, uh, through their, their church or their community of faith, where they can get it through associations, um, where there are other communities that they can go to that they're going to have a longer term affinity and a greater affinity Um, and those communities would be incentivized to focus not just on what, what, uh, the doctor says is the sick care system, um, but on a real healthcare system.
Josh Taylor: do you see anybody developing a model or their models that you've seen from your kind of view at the highest level? You mentioned associations. you can work for a union.You have care through the union, but you can go to different employers that are part of [00:13:00] that union. You don't have to necessarily stay with one company. Is that similar to what you're saying? Or how is that different?
Alex Acosta: It is. And I'll give you several examples. Um, you know, the building trades have very, very good health care plans that the unions in the building trades area because, um, their members go from one workplace to another workplace and their members are going to be part of the union through retirement.
And so they have every incentive to provide. Very high quality care. Let me give you a different example. Um, something that that we tried to implement in the Trump administration is called Association of Health Care Plans. And the vision behind that is instead of having your small business, uh, provide insurance, why not have Thank you.
You're welcome. The chamber, the local Chamber of Commerce provide insurance. Um, the local Chamber of Commerce can bring together all the employers and you can go from employer to employer. And as long as they're part of the Chamber of Commerce, you can keep that same insurance plan. Um, if you're a realtor, why not [00:14:00] have the National Association of Realtors provide insurance so that then you can go from one realtor to another.
You're not locked in, you have portability and. There is in it. You're going to have a long term relationship with your industry of choice. Let's talk about independent contractors. More and more individuals are going to be independent contractors, whether they be independent journalists, whether they be independent drivers.
Why can't the Association of Independent Journalists offer health care benefits the same way that the Washington Post offers them to, uh, to to their employees? Um, and then you have communities of faith. We already have. Systems are called health shares where communities of faith come together and they share expenses So these exist we just need to look for innovation and we need to make it grow
Firouz Daneshgari: I would add to that, uh, the concept of the birth of the gig economy, as you know, they're increasing number of people. You know, the COVID pandemic pushed us into people working from home.
People kind of, uh, Uh, and the world of the Internet online services and so forth has really created a new segment of the economy. Uh, that, uh, again, people [00:16:00] going for the health care. They can join to this associations number one from their risk portfolio from and health insurance perspective, you could have a much better fitting Into the into that risk portfolio.
Number two, you can perhaps change your association depending on the services they provide to you. So I would love for you to elaborate on that concept because a lot of employers may not know about this association and how really innovative and revolutionary it would be to open the it. Uh, basically health insurance market this, uh, market this space into consumer choice and frankly, the employer's choice.
Alex Acosta: Well, Dr. Daneshgari, you, um, you, you, you rightly, um, you know, brought up association health plans and, and there's points that, that you raised that I want to elaborate on first. What is it? Right. And so, um, we put in a rule that allowed for them, um, the idea is [00:17:00] that if an employer can offer and does offer healthcare.
Insurance that an association of employers should be able to do the same thing because it's just groups of employers coming together and the Las Vegas Chamber of Commerce to to set one example came together, um, brought its membership together and within a few months, I think they had more than 300, 000 lives.
Subscribed to a group insurance plan, and in that did several things. First of all, you went from, you know, small pools of small businesses with 40 employees to 300, 000 and all of a sudden you're driving down costs incredibly. Um, second, you're making it portable. So, you know, as long as you're in Las Vegas, you can go from from business to business to business and carry.
If your insurance with you, um, and, and that, that, that's very important to, to individuals so they don't feel locked into their [00:18:00] employer. But the third part that was so important is, is all of those lives had choice. Because the Las Vegas Chamber did not just offer one insurance plan like so many businesses do, but they offered a portfolio of insurance plans that you could sign up for.
And, and, you know, for, for a young, healthy individual, one plan might be appropriate for someone that's getting on a little in years and starting to feel the creaks of age, a different plan might be appropriate. And individuals could choose the plan that was right for their family. Um, let me, uh, you touched on this, but I also want to touch on a different point of innovation, which is, um, the insurance market right now is heavily regulated and it all proceeds.
There are certain things that all insurances have to do. And we're familiar with the idea of the deductible and the copay. And all of these, um, but when you have innovation and choice, if you look at some of the [00:19:00] other products that are out there, some of the crowd share and, and faith based share concepts, uh, they really turn things around while they'll say, you're responsible for the first, let's say 200 or 250 of any illness.
Um, and that doesn't go to the deductible. The idea is that for routine stuff. You pay for it the way you might pay for routine, uh, stuff around the house or for your car, and then insurances for the really big stuff, the unexpected stuff. And so the other value of choice and innovation is it really, it, it, it allows, you know, Individuals to select what's right for them, but it also allows companies to experiment with what works best for the consumer.
Um, preventative care versus sick care. Um, uh, you know, true insurance versus coverage for routine, um, you know, routine issues. And so we need much, much [00:20:00] more options for individuals.
Firouz Daneshgari: it would open up the gate for small employers. As you know, the majority of employers in the U. S. are under the, you know, the smallest small employers under 100 and currently these employers have no choice but to buy probably the most expensive package on the market, [00:21:00] which are full insurance because these employers can have Uh, for time wise resource wise to get engaged with the self insurance products and so forth.
And again, from a day to day that I see with dealing with the small employers, the market is absolutely begging for a solution
The unfortunate part has been the employer somehow. Delegated their responsibilities of finding what is best for their companies to brokers. And with all due respect to the brokers, there is a little bit of, uh, this misalignment there because the brokers [00:22:00] make their money based on the commission they receive.
The brokers are somehow extension of the insurance companies. And there's a lot of payments going on behind the brokers and the insurance companies where, uh, when the associations or the group of employers or the group of, uh, you know, uh, uh, uh, Religious or belief wise, you know, they get together and so forth.
That intermediation, uh, kind of goes away. So I can see how, uh, when, uh, this alignment, this association really, to me, aligns the choice of the consumer with employers and, you know, what the intentions of really an insurance, a true insurance should be.
Alex Acosta: Dr. Daneshgari, um, you are again right on point when I, uh, mentioned that there were two, two intermediaries between, um, the person and their doctor, the, the insurer and the employer.
Um, [00:23:00] let's add a third one there, broker, you know, which, uh, which is, is very much the case. Um, but you know, the other point that you brought up, which I think is equally important to talk How, you know, employers want to do the right thing. They want to help their employees. But by the time you hire the broker, by the time you talk to the insurance company, they are not focused on necessarily the long term health of the individual and, and having options like association healthcare plans, like health shares, um, engages the person, the individual, uh, more actively in taking care of their own health care.
Firouz Daneshgari: So what would it take to make a basically health offering by an employer more efficient, what would go inside this association
Alex Acosta: Well, you know, we've talked about this quite a bit, and I'm going to answer your question with one word, choice. Um, what it would take is true choice, uh, a, a, a system where the individual, the consumer, um, the person, uh, who cares most about their health, which is the person themselves, has the ability to choose among various options, right?
And so you can put the traditional. insurance in that package. And then you [00:29:00] can offer another insurance that as you, you said, doctor is not about sick care, but it's about caring for the whole person. That's about preventative medicine. That's about advice and healthy lifestyles that might even include a gym membership, maybe, um, you know, virtual care, um, you know, consulting services for what makes a good diet.
If you've got a family history of diabetes or others, and let the person choose I think I know what the person's going to choose, but, but I could be wrong rather than having the government choose for them. Let the person choose. You know, I also want to touch on something else that you mentioned, which is, um, you know, the role that, that big corporations playing this market, um, because you have hospital systems that grow bigger and bigger.
And, and, you know, size does bring efficiency, but, you know, um, there's something called a monopoly and, uh, monopolies always have higher prices. And we all [00:30:00] know this, just look at your power bill. You know, um, the government, uh, you know, has commissions to, to help power companies set the power because they're classic monopolies and, and often health health systems become monopolies are close to it.
Um, and there's a third part to that. Which is, and you mentioned this, um, small employers lose out. Um, and, and it was, I had a really interesting experience when, when we propose association healthcare plans, I was on the phone with a journalist from one of the, the top five newspapers, um, who came out opposed to the plan.
And, and I said, under this plan, all we're saying is that the Association of Independent Journalists should receive the same healthcare benefits under the same rules as your newspaper. Because this newspaper is big enough that they have a different set of rules. If you're a large company. You don't [00:31:00] have to have a lot of the requirements that are imposed on the small businesses.
Small businesses on average have to pay 30 percent more for their insurance in large companies. And the response I got was, yes, but if we allow all the small businesses to follow the same rules as the big businesses, they're going to have to pay 30 percent more for their insurance. Um, then government health insurance will fall apart because everyone will be getting private sector health insurance.
And I'm like, so that's why you're opposing it. Um, you know, and, and so everyone, you know, wants to make choice seem frightening or scary or say you're going to lose benefits. All I'm saying is, you know, Give people, you know, small companies or associations the same ability to have the insurance options that are available to the employees of IBM and the New York Times and the Washington Post.
Josh Taylor: Well, I think there's a darker side to that other, to that same curtain, if you will. There's the front of the curtain where we see it's on stage and that's all the [00:32:00] debate around how are we going to pay for things. But I think hiding inside the articles that Feruz was talking about are the waste. That is driven by fee for service, and if we don't change, we don't change the model on that backside of the curtain, and we're still gonna be happening
Firouz Daneshgari: another evidence again, another article from Wall Street Journal that I would take your both of your inputs that says.
Insurance pocketed 50 billion from Medicare for diseases. No doctors treated. And between 2018 and 21, uh, basically, the insurance companies who were providing Medicare advantage, they Basically receive 50 billion dollars in diagnosing diabetic cataracts and person didn't have any diabetes. Uh, so that what happens when you eliminate the choice and you going back to Alex's example of the journalist.
Uh, so I think we are coming toward [00:33:00] the kind of end of the conversation. Alex, as you know, this year, Is the election year and, uh, you guys and Trump administration started some of the trends and companies like us, uh, like both time medical. We like the trains. We like, uh, to generate products and protocols that provide choice to the individual consumers and to their employers and so forth.
So how do you if you kind of put your crystal ball In front of you, what do you see the trends are going in the, in the healthcare industry from, uh, your standpoint?
Alex Acosta: Well, I, I, I think that the trends if, uh, certainly if President Trump is, is elected, uh, is going to be to provide more options for individuals.
Um, not just the traditional plans, but there are other There are other options that are out there, shorter term plans, uh, plans that focus more on overall well being, uh, plans that are offered through associations, [00:34:00] um, uh, sharing through communities of faith. Um, let's not assume, you know, the government likes to assume they know what's best for us, but that doesn't.
really that that just means that everyone is stuck in the same big plan that falls on its own way. Let's let individuals pick what is right for them. But, but, you know, I also, I don't, I think it's a mistake to sort of say this is all about government, right? Um, you know, the regulations can change, government can allow association healthcare plans.
Um, you know, things, uh, government is a very large player in this sector, but There's already things that employers can do. Uh, employers don't have to, when they talk to their broker, they don't have to get the traditional, uh, insurance. They can talk to their broker and say, what happens if instead of going through the traditional insurance, um, we give all our employees 2, 000 more a month, uh, we up their salaries by 2, 000 a [00:35:00] month, and tell them, go out and find what works best for you.
And some may want a true, some may want, you know, the, the, what's called the Obamacare or the, the ACA plans. Uh, others may want to, to go out and buy, uh, plans that are much less expensive and, and offer less and take the difference. And, Um, and then spend it on gym memberships and other things that keep them healthy.
Others may say, you know what, I'm going to just get low cost plans and enjoy life and worry about it later. But that's their choice. Um, others may go out there, they're sharing ministries and, um, and online crowd shares where you share expenses. And, and, and, and you just, you know, you pay for most of it yourself and insurance is there for the really expensive stuff.
So employers right now can do a lot of things. They don't have to rely on the traditional model. And as more and more employers do this. [00:36:00] They are the ones that are going to push government to reform the system.
Firouz Daneshgari: And I agree wholeheartedly with what you said, uh, Alex, is that is, uh, to me as a, again, a person who spent his entire life in healthcare, number one mandate for us is what are To improve the increase the choices of the consumer.
through the choice of the consumer, we can improve the efficiency. A part of the efficiency is to create the choices for the insurance for the employers and through that to build in protocols and processes that will shift the, uh, the secure, uh, orientation to a health care orientation.
And I think this is the moonshot that I'm praying for that with creating the saving, eliminating the waste, we can go. Really take this the health care, which is, in my opinion, the best health care in the world in terms of the doctors and in terms of the technology we have to make it to a point that is efficient.
And frankly, our people can afford it.
Alex Acosta: Millions of Americans join you in those prayers.