Health Insurance is Rigged & Controlled by the Big Companies w/ Donvan Ryckis of Ethos Benefits - AZ TRT S06 EP10 (272) 6-15-2025

Health Insurance is Rigged & Controlled by the Big Companies

w/ Donvan Ryckis of Ethos Benefits

 

- AZ TRT S06 EP10 (272) 6-15-2025           

 

What We Learned This Week

• Health Insurance is primarily run by the Big 4 - BUCA: Blue Cross United Healthcare, CIGNA, Aetna
• To Insurance Co’s – Premium = Revenue, and they are not going lower profits, so no incentive to lower costs
• Health insurance employer group plans can be broken down into 4 Parts
• Network PPO is what people typically think of when they think of health insurance
• There have been revisions to the Healthcare Act passed in 2021

 

Guest: Donovan Ryckis, Ethos Benefits

https://ethosbenefits.com/

 

https://ethosbenefits.com/documentary/

https://businessofbenefitspodcast.com/

 

Our Ethos is Simple: Fiduciary First.

Act in the best interest of those we serve—no matter the cost.

‘Ethos’ represents the guiding principle, character, or spirit of a person or organization. It’s the ‘why’ that drives decision-making and fuel’s purpose.

Our Ethos is deeply rooted in the story of our Founder, Donovan Ryckis.

Over a decade ago, Donovan, a fiduciary Series 65 securities advisor specializing in retirement and pension planning, was approached by a client facing a dire situation. The client’s publicly traded broker claimed there was no solution for a staggering 37.5% health insurance renewal increase—a cost that threatened the business and its employees.

With no prior experience in health insurance markets but guided by his unwavering fiduciary principles, Donovan took on the challenge. The result? He mitigated the risk entirely, delivering a solution 12% below the current rate. This allowed the business to thrive and ensured hundreds of employees wouldn’t have to choose between basic necessities and skyrocketing health premiums.

That moment sparked a revelation. The fraud, waste, and abuse Donovan had fought in retirement planning paled in comparison to the challenges in healthcare. He saw an opportunity to bring transparency and fiduciary principles to an industry in desperate need of change.

Donovan pivoted his career, becoming one of the first fee-based health insurance advisors in the nation. By removing all conflicts of interest in broker compensation, he laid the foundation for what is now the leading innovative employee benefits agency in the country, delivering higher quality care at a significantly lower cost to employers nationwide.

 

 

 

Notes:

 

Ethos Benefits deals with employee benefits, with a primary focus on group health insurance

 

Per Donovan ‘Employee benefits are rigged’

 

Insurance company premium equals revenue. There is no incentive to lower cost, as it would lower profits.

 

ACA Obamacare passed in 2010, and it capped profits for insurance companies at 20%

 

Insurance Co’s are working to expand their pool to make more profit

 

Health Insurance guarantees inflation keeps going up, so family of 4 could spend 35K a year

 

For a business, healthcare cost and employee benefits are a top 3 P&L expense

 

Ethos strategies can create a 30 to 40% reduction on premium impact to lower costs for a business

 

The HQ is in Florida, but they are a virtual office with agents and clients nationwide

 

Healthcare finance and delivery + Improving employee benefits

 

 

Seg 1

 

Donovan’s bio, he was a financial advisor with a Series 65 license before he got into health insurance. Around 2014 he moved into health insurance seeing an opportunity for better service.

 

Typically you see agents who are working for the health insurance company and not really working for the employer companies they are selling to.

 

Health insurance is primarily run by the Big 4 – BUCA: Blue Cross United Healthcare, CIGNA, Aetna.

 

Health insurance employer group plans can be broken down into 4 Parts:

 

1.    TPA or third-party administrator

2.    Network PPO or HMO

3.    Pharmacy benefit RX

4.    Insurance that covers the caps the limits on the stop loss

 

PPO is your primary network and open on using referrals

HMO is a non-preferred network typically has less offerings and tight on referrals

 

Ethos Benefits helps employers to break up the four parts of a group plan and customize

 

Network PPO is what people typically think of when they think of health insurance.

 

Network and the Big 4 health companies have a tighter deal with doctors and contract prices. A lot is pre-negotiated with a set of rates, which is the point of a PPO. This is where you get larger claims and they run in the system of healthcare.

 

 

Seg 2

 

Pay more for healthcare in the U.S. than the rest of the world

 

The biggest pharmaceutical companies are in the US

Pharmaceutical companies in flight prices, and also set the prices

They make money through spread pricing

 

Employers can actually pick up their own Pharma benefit and get the rebates that the big health insurance companies are not giving them

 

Healthcare system is a rigged game

The fraud waste and abuse extremely high in health

 

401(k) and retirement benefit industry is actually tighter with more disclosure than the healthcare industry

 

Regulated better since the creation of the Securities Act in the 1930s and updates that ran through the 1970s and beyond with things like ERISA

 

There have been revisions to the healthcare act passed in 2021 - started in Jan.2022

 

Actions had 3 disclosures:

·         Brokers comp and bonus

·         Data with gag, clauses, and full access to data upon request

·         Benchmarking for drug cost

 

 

Further Notes via Google:

 

The revisions you are likely referring to are part of the Consolidated Appropriations Act of 2021 (CAA). While the CAA was passed in late 2020, many of its provisions, including those related to transparency in healthcare, became effective on January 1, 2022. 

The three key areas of disclosure you mentioned are directly addressed within these regulations:

1.            Broker's Compensation and Bonuses: The CAA amends ERISA Section 408(b)(2) and requires service providers, including brokers, to disclose specific information to group health plan fiduciaries.

2.            Data Transparency (Gag Clauses and Full Access to Data): The CAA prohibits gag clauses, which prevent plans from providing access to their data. It also requires health insurance carriers to attest annually to their compliance with this prohibition. Moreover, the Health DATA Act, a proposed bill, would further reinforce the right of employers to access their data and hold service providers accountable for non-compliance.

3.            Benchmarking for Drug Costs: The CAA includes provisions regarding pharmacy benefit and drug cost reporting, which aims to provide greater transparency and potentially lead to better benchmarking of drug costs. The Build Back Better Act, a separate piece of legislation, also included provisions for Medicare to negotiate drug prices, further impacting drug costs and potential benchmarking. 

These revisions aim to increase transparency in healthcare pricing and empower consumers and employers to make more informed decisions about their healthcare coverage. 

 

Seg 3

 

Ethos works with Employers to create business plans usually with a 3 to 5 year time horizon. The goal is long-term to lower healthcare cost.

 

Example would be a company with 100 employees with 50 to 80% of them on the health plan (does not include dependents).

 

Ethos wants to keep the demands of a company low, easy transition.

 

Ethos handles employee Qs and healthcare navigation. Ethos is full service.

 

Risk handled 1 of 4 ways -

Reduce, avoid, retain, transfer - Transfer to insurance

 

Broker wants to transfer risk

Company can control costs

Careful not to have too much disruption with a switch to a new company

 

Ex - start with pharmacy part

NDC National Drug Code

Run report vs costs

 

Pharmacy benefit mgr

 

Pre packaged health plan

Gets co approved pharmacy benefit

Save 5 - 15% on costs (30%)

 

Separate - parts of group plan

 

 

Seg 4

 

Brokers comp - incentives from big insurance companies

 

Opening move - edit pharmacy benefit piece

 

State by state - regulators and rules

 

Employers / employees

Know the network and PPO

 

Nationwide covers insurance part – Stop-loss Insurance

 

30-40 major stop loss companies

Ex: Allstate Met Life Sun Life

 

Stop-loss insurance for group health plans acts as a financial safety net for self-funded employers, protecting them from large, unpredictable medical claims. It is a form of additional insurance.

 

Healthcare risk is incredibly predictable on group basis

 

Overall predictable w stats, actuarial analysis

 

Gag clauses look at dataset from current carrier

 

Prescription database sets

 

3rd party admin are less of a concern, lots of claims

 

Average of 18 claims per employee per year, includes dependents

 

Data - review

AI Claims analytics software

 

AI claims analytics software is transforming how insurance companies handle claims by leveraging artificial intelligence and machine learning to analyze data, automate tasks, and improve decision-making. 

 

30 - 40% reduction in premium w Ethos

 

 

Further Notes via Google:

Group Medical Plans

Breakdown of the common components of a comprehensive employer group health plan, particularly within the context of a self-funded model. 

Here's a more detailed explanation of each part:

1.            TPA (Third-Party Administrator): A TPA is a company that provides administrative services for self-funded health plans. This includes processing claims, handling enrollment, and managing other administrative tasks that would typically be done by an insurance company.

2.            Network (PPO or HMO): This refers to the group of doctors, hospitals, and other healthcare providers that the health plan contracts with to provide services to its members. The network defines where employees can go to receive care and often dictates the level of coverage they will receive (e.g., in-network vs. out-of-network benefits).

·                                             PPO (Preferred Provider Organization): Offers more flexibility, allowing members to see out-of-network providers, though with higher out-of-pocket costs.

·                                             HMO (Health Maintenance Organization): Typically requires members to stay within the network for covered services, except in emergencies.

                Pharmacy Benefit (RX): This component manages the prescription drug coverage for the plan. It includes negotiating drug prices, processing claims for prescriptions, and managing the plan's formulary (list of covered drugs).

                Stop-Loss Insurance: This is a crucial element for self-funded employers. It protects the employer from catastrophic claim costs. If an individual employee or the entire group's claims exceed a certain threshold (the "attachment point"), the stop-loss insurance kicks in to cover the excess costs, limiting the employer's financial liability. 

Additional Considerations:

·                     Data Access: Self-funded plans often provide employers with greater access to claims data, which can be used to analyze healthcare costs, identify trends, and implement strategies to improve employee health and manage costs.

·                     Benchmarking: Employers can use claims data and industry benchmarks to compare their plan's performance to similar organizations and negotiate better rates with providers and other vendors.

·                     Wellness Programs: Some employers offer wellness programs to encourage employees to adopt healthy behaviors and potentially reduce healthcare costs.

·                     Essential Health Benefits (ACA Compliance): Group health plans must comply with the Affordable Care Act (ACA), which requires them to cover a list of essential health benefits, such as outpatient care, emergency services, hospitalization, and prescription drugs.

·                     Other Benefits: Group plans can also include other benefits, such as dental, vision, life insurance, and long- and short-term disability insurance. 

Understanding these different parts is essential for employers to effectively manage their group health plan, control costs, and provide valuable benefits to their employees. 

 

 

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