Hello, everyone. This is Jacob Emerson with the
Becker's Payer Issues podcast. Thrilled today to be
joined by Alan Cohen, who's the cofounder and
chief product officer at Sentivo.
Alan, thanks so much for taking the time
to be with me on the podcast today.
Yeah. I'm happy to, Jake. I'm very happy
to be here today. Yeah. And before we
dive into everything we wanna talk with you
about, actually, a pretty specific topic and everything
going on there, can you tell us a
little bit more about yourself, your background in
health care, and what it is that you
do today at Sentivo?
Sure.
So I've had a pretty long at this
point, but varied career in kind of health
coverage and health care.
I started my career,
in, you know, working for health plans. I
worked for, you know, three different health plans,
some of the major health plans in this
country at the time, at least. You know,
Prudential was the, was was the first one,
also, Cigna and MassMutual.
I then started,
one of the first Internet based employee benefits
companies called Online Benefits,
where we were doing kinda, you know, something
that's really common now, like doing enrollment and
communication
all online. And so people don't have to
fill out paper forms. Well, actually, the company
I started was one of the first companies
doing that. I ran that company for about
ten years.
And then I sold we sold it to
a public health care IT company named Adam,
a d a m, a very well known
company in kind of the health care information,
space.
And then I began,
one of the first actually, the first,
benefits exchange company. This idea of of of
giving employees money and letting them shop for
benefits,
which was a, you know, kind of a
hot idea for a while. That company is
called Liaison.
We were the first benefit exchange,
you know, company that really trying to kind
of create competition
among among health plans competing competing for members.
This is all pre ACA. So the idea
of these health care exchanges in in part
came from the the work that we did.
I also spent some time at,
Willis Towers Watson, you know, the,
actuarial consulting firm.
And then,
now going back five years ago, I was
one of the founders of Sentivo. We are
a, a new health plan working exclusively
with, high performing clinically integrated providers and accountable
care organizations
to really try to try to deliver cost
effective, high quality health care,
you know, to to employers and, you know,
their employees and members.
Also, by way of academic background,
I have a, MBA from Columbia University in
London Business School, and I also have an
Miles per hour from Johns Hopkins. And so,
you know, pretty varied career
in different parts of kind of the health
coverage,
kind of world. But one thing that always
seems to be a recurring theme is is
health care inflation and trend. No matter where
I go, it's it's something that that we're
always trying to talk we're always talking about.
We're always talking about trying to figure out
ways to kind of bend the bend the
trend curve,
and, you know, simultaneously
help, people get have access to high quality
health care that's not frankly gonna
gonna gonna, you know, financially, you know, harm
them or financially harm their, you know, their
employers.
Sure. Absolutely. Well, appreciate you giving us that
rundown, and let's dive right in and talk
about some of the health care trends we're
seeing right now. Certainly, as we go into
next year, some pretty unprecedented changes,
as we head into 2026 and what is
looking like a pretty big increase for people
all over the country when it comes to
ACA coverage and and premiums.
Obviously, as as you know, there's there's a
lot of limbo right now over the enhanced
subsidies.
There's worsening market morbidity that's really been dampening
earnings for the big players in this market.
And now we're seeing all over the country
the proposed rate filings with premium hikes. We've
seen as high as over 50%
in in certain states, certain markets, but,
it seems that the average proposed increase right
now is around 18%.
So give us your perspective on this, Alan.
Given what you what you've seen, the history
of this market,
what's what's driving these increases, and what's how
should we be thinking about this right now?
Yeah. I think the first thing is look.
These are shockingly high increases. And, you know,
in this,
you know, in this area, we've kind of,
in some ways, gotten dull to the whip
of of of rising inflation. But I think
we have to realize that, you know, that
the, you know,
rises in health care costs, which then create
rises in premium or changes in, you know,
the the pool
of of who is covered, which causes rise
in premium.
They they just have to stop. Right? I
mean, we're we're you know, I I feel
like we've been talking about this. It looks
me. I've been talking about this since I
entered this industry in 1989, which is quite
a long time ago. But but I do
think it has been a, you know, kind
of long, long path going off a cliff.
Right? So we we can't be kind of
dull to these things. And and I think
this is, you know, a reemergence
of of health care and and health coverage
or premium
inflation. And it's not, you know, it's not,
you know, solely, you know, you know, segmented
into the ACA markets. I think ACA markets
might be the kind of sharp end of
the spear
for a lot of reasons, but but we're
seeing this in in the employer coverage as
well for, you know, for insured employers. We're
seeing it in in, in employer coverage for,
you know, for self funded employers.
And, really, it is a a broad phenomenon
that is occurring in all different aspects of
of health coverage, and it's one that we
we must attack. I mean, we, you know,
we we we can't go through kind of
yet another, you know,
cycle of of double digit inflation
because we've gotten to the point in in
our industry here that I mean,
it has become unaffordable, unaffordable for companies, unaffordable
for people. I mean, you know, you know,
the the last the last cycle of of
cost increases
were mitigated by
by raising deductibles. Right? I mean, you know,
deductibles,
we used to have $500 deductibles, dollars 1,000
deductibles.
They would only apply to to, you know,
to hospitalization and surgery. And then, you know,
now with with high deductible health plans that
are HSA qualified, I mean, people have 2,000,
3,000, 5,000, dollars 6,000 deductibles, 10,000, dollars 15,000
are out of pocket maximums. I mean, these
are individuals that have,
you know, a few thousand dollars of,
in the bank, and they have and what
has happened is
they have become, you know, functionally uninsured.
I mean, you are functionally uninsured
when you can't afford your deductible and you
can't afford your out of pocket maximum.
And so we have you know, in in
kind of the last cycle of health care
costs,
increases, we were we, you know, we mitigated
that in the industry by just jacking up
deductibles to the moon. Right? And then hoping
people would put money in HSAs,
which, you know, some people did, but a
lot of people you you can't put the
money in HSA if you don't have the
money. Right? And so we don't have that
escape valve anymore,
because our our the deductibles are as high
as really they can be. They're they're they're
they're getting close to, you know, a you
know, ACA limits.
And so, you know, it's really gonna be
very difficult for the entire industry. When I
say industry, I I mean I mean health
care providers.
I mean insurance companies. I mean health plan
administrators. I mean employers.
It's gonna be horrible for all of us
if we don't find ways to mitigate,
you know, these broad cost increases.
And and, again, there's a a whole series
of reasons why. And, Jacob, would you like
me to go into some, you know, some
some reasons on on why why I think
we're seeing these cost increases like you mentioned?
Yeah. Absolutely. I mean, give us some specifics
on on exactly what is driving this
industry wide. Yeah. No. So I I think
they they fall into a few buckets. Right?
I think one bucket is just rising health
care costs and rising inflation. Right?
I mean, we know that that health care
costs,
the health care inflation, you know, historically has
has for decades and decades rose significantly
above, you know, consumer price index. Right?
But in, you know, in the last ten
years,
it had been closer to the consumer price
index than it had been, you know, previous.
I I but but we're going through another
cycle now of of simply higher cost inflation.
Right? And so so if you, you know,
again, if we wanna use the number of
15%
or 18%,
you know, for premium increases like you you
mentioned, you know, the ACA, you know, going
up 18%. Well,
eight to 10% of that so eight to
10 points of that is is really due
to just inflation in health care costs.
And so, you know, some some you know,
there there you know, there's some culprits in
there. Right?
Drug costs are rising significantly,
faster than, the medical expenses.
You know, the advent of GLP ones,
has been kind of, you know, certainly a
boon
to,
to people who, who are who are overweight
and have used them for weight loss and
and lose them to control diabetes and use
them, but they're also quite expensive. Right? And
they have and they have and unlike
many, in fact, unlike almost all
very expensive drugs that are are segmented to
a small part of the population,
you know, GLP ones,
thirty, forty, fifty percent of the American population
could potentially be using GLP ones,
if they chose, right, to,
due to either diabetes or
prediabetes
or, or or obesity.
And so that is certainly, you know, increasing,
costs as well. And so we we so
so we have at its base, at its
foundation,
just, you know, a an inflationary
environment
in, in health care costs. So health care
costs, think about medical and prescription combined. Right?
That that is higher than the past. Right?
We we were we were kind of in
a four to 6%,
health care inflation
range, and now we're at an 8% to
10% health care inflation range. But but the
premium cost increases that you talked about were
significantly more than that because this is only
one component
of of what's called, you know, premium or
even medical trend, what we call a trend,
which is different than inflation.
A number of other things that are happening
that,
that the insurance companies are are looking at
and worried about are things like the enhanced,
you know, the the expiration of the enhanced
premium tax credits.
So the expiration of the enhanced premium tax
credits, which essentially is going to make,
health insurance coverage
less affordable,
more expensive
for a significant number of Americans. Right? Because
they're not gonna get their enhanced premium tax
credit anymore. And so so their costs are
gonna go up. And we know what happens,
especially in an environment where, remember, at the
beginning of the ACA, there was man you
know, it was mandatory health coverage. Well, the
mandatory health coverage has now been repealed. Right?
We don't have we don't have to have
insurance in this country. Right? Right. And so
if health care if health care,
you know, if if the effective
cost
for health insurance goes up, right,
then you're gonna have more people who opt
not to have health insurance on the particularly
on the individual market. And those people who
opt to have not had health insurance, you
know, we know, we've seen it historically,
are gonna be those people who are healthier
and have less health care expenses. And so
what that is gonna do is it's going
to worsen the risk pool. And so the
risk pool will will get worse,
because the
the people who are you know, who have
lower health care expenses will will opt out
of the pool because there's no longer
a mandatory
requirement to have health insurance.
And that is going to kind of increase,
increase costs for everyone who's remaining. And I
I saw the Keisei Family Foundation estimate that
that, you know, they think about four points
of the, of of this, you know, let's
call it 18%
is is likely due to, due to just
that due to the worsening of the health
pool,
you know, due to the,
expiration of premium tax credits. And then we
have a number of other things that are
going to,
make health care costs for, again, the commercially
insured. So people who get their get coverage
through,
their employer or get coverage individually. It'll it'll
make their cost more expensive.
The most recent budget bill that was passed
is gonna reduce,
reduce the number of people on Medicaid. Right?
And and people who are who currently are
on Medicaid, it's gonna substantially reduce them according
to the, the congressional budget office of CPO.
Those people are gonna gonna no longer have
coverage. That's gonna create on more uncompensated care
for health care providers. And when health care
providers have a greater level of uncompensated care,
well, they still have to keep the lights
on. Right? They still have to pay for,
you know, for all of their inputs,
in health care. They have to pay the
salaries of all their health care providers to
deliver that great health care that they do.
And so they have to then shift the
costs from,
from this case, kind of uncompensated care into
the only place they can shift cost to,
which is the commercial market. Right? You can't
shift costs in the Medicaid. Those rates are
pretty much what they are. You can't shift
costs to Medicare. CMS determines what those costs
are, what those rates are. So you shift
the cost to the commercially insured.
Those are people who are insured through employers
or insured through their own their own, individual
insurance. And so that cost shifting
is gonna increase,
increased costs as well. And that's the thing
that, you know, the insurance companies are trying
to predict what you know, how much cost
shifting is gonna occur over the next, you
know, year or so,
you know, due to due to that. And
then then I think another you know? And
then there's, you know, even even maybe little
in quotes things like like tariffs are gonna
increase input cost. Right? I mean, you know,
the tariffs that are starting to come in
now are gonna increase the input costs for
health care providers in a variety of ways,
and then they, in turn, have to increase
their costs above, let's say, a regular inflation
rate,
in order to, you know, financially survive. So
we have, like,
four or five things all hitting us at
the same time, which is the which is
resulting in that, you know, like you said,
maybe 15 to 20% increase Yeah. In premium,
which is a combination of all these different
things. But is it is it a foregone
conclusion at this point, Alan, that the enhanced
subsidies will not be extended? I mean, what
are you hearing both within the industry among
lawmakers?
Is this where we should be operating from
at this point?
Yeah. I I think the general consensus
is that they will not be extended because
the extension is just too expensive. Yeah. I
mean, look. We we we just passed a
budget bill that radically increases
our
our deficit. Right? According again, not to me.
It's not a political statement at all. Kind
of the congressional budget bills, the CBO. The
CBO
scores all these things in a very, you
know, nonpartisan,
you know,
mathematical way. Right?
We are going to,
increase
our deficit. And so I think anything
you know, after kind of the passing of
the most recent budget bill, anything that's gonna
increase
cost to to our government, which doesn't have
the money to pay it. Right? Increasing deficits
mean very simply. Right? We don't have the
money to pay for these things, so we're
gonna take out more debt. Right? Yeah. I
think it's gonna be very hard,
you know, to to get anything passed that
is going to,
significantly
increase,
our federal deficit. Yeah. So I would not
bet that the enhanced premium tax credits will
will be extended Sure. Because we're just not
in a place right now in this country
where it's gonna be easy to increase government
spending. Yeah. 100%. And, you know, it's interesting.
We've been seeing some,
industry analysis online from executives at health plans
saying that just this year alone, these subsidies
have cost over a $130,000,000,000
in one year. And that's that is way
over what the CBO had previously estimated, which
is around 330,000,000,000
in a decade. So to your point, just
an extreme amount of money that these subsidies
are costing.
So, okay, the subsidies aren't extended.
Ultimately, what does that mean for the stability
of the ACA market? What happens
to to this segment moving forward?
Well, you know, unfortunately, you you we we
could see the ACA market get into, you
know, real a real death spiral. Right? Which
is,
so, again, the elimination
of the PTCs,
again, increases the effective.
Right? Not the the gross premium is
let's say let's just use simple numbers. Let's
say an insurance company is charging $600 a
month. That's gross premium.
But now let let's imagine that an individual
is getting a $200,
you know, credit. Right? So the effective premium
for that individual is $400.
But if that credit goes away, now the
effective premium of that individual is $600.
Well, this individual made a buying decision
with four with a $400 cost. Is that
insurance worth the $400
cost? Right?
Now now this individual is gonna have to
buy make a buying decision. Is that insurance
worth the $600 cost? And and we know.
You know? Look. Look.
This is you know, there's there's real elasticity
in this market. As costs go up,
less there's less people who purchase it. Right?
More people make the decision to say, you
know what?
I'm I'm not gonna buy health insurance. Again,
you know, this this all would be very
different if we were still in a mandatory
insurance environment,
you know you know, right after the passing
of the ACA. But since that has been
repealed,
we we now it is not a law
that you need to have insurance. And so
you'll have a segment of the population
who opts not to have insurance. And it
and, you know, I think, you know, there's
good industry analysis
on on, you know, on on projections on
what that segment of the population is, and
it's significant. Right? There's a significant number of
people who opt not to have insurance, and
what that will do is that will worsen
the pool. And so what the insurance company
is trying to do now is predict
what that kind of what that pool what
that pool is gonna worsen to. Right? Because
what you have again, let's just use, you
know, simple numbers. I don't I'm not I'm
not claiming that these were these is what
this is exactly what's gonna happen. But let's
say 10% of the people who are buying
individual insurance now opt to not to have
individual insurance because of the of the,
because of the lack of the PTCs.
We know that
that that that on average, those people who
opt out of insurance,
coverage are a significantly healthier population than the
me. Right?
And so what you've done now is the
remaining, in this case, 90%,
have higher
average health care expenses. You you essentially worsen
that pool. Right? And so now,
the premium need to cover those expenses
is higher. Right? And what that'll create is
another cycle of people who say, well, now
that the price goes from $600
to
$700
because it's a worse pool, well, that's a
whole another segment of people who will decide,
I don't need to have coverage. Right?
And you can get into, again, what's called
death spiral,
where as the costs keep going up, you
have less and less people opting for coverage.
And every time you lose people, in this
case, you're losing people who are on the
on on average. Again, not every one of
them. There's always gonna be someone you lose
that all of a sudden has a medical
expense. But on average, you're lose you're losing
people who have lower health care expenses, which
again worsens your pool, which cause you to
increase your rates again. Right. So it could
get into a death spiral where we're really
seeing a smaller and smaller pool of people
buying coverage
that that is essentially a riskier and riskier
pool with higher and higher premium rates. Absolutely.
So you've got this smaller pool. You've got
millions peep of people uninsured that were previously
not. What does that mean for a company
like Scentivo, Alan?
So so, again, at Scentivo, I and I
I think that
and what we do is really try to
take a a kind of different a different
path to say that if we can just
keep doing the same things that we're doing
in kind of health coverage,
we're just gonna be all running off this
cliff. Right? And so what I think that
every, you know, company has to think about,
what every individual has to think about if
they're purchasing individual insurance is
how is your health coverage provider
thinking about controlling
costs
this year, but also five years, ten years
down the line? And so what we do
at Sentivo
is we we build,
plans that are called high performing. They're plans
that will
increase at a
significantly lower first of all, they save money
right away, and then they increase at a
significantly lower rate than,
you know, than kind of, let's say, general
regular
insurance coverage. Right? Well, why? Because we work
with providers who themselves are high performing. These
accountable care organizations or clinically integrated networks who've
been designed
to really kind of meet the aims of
health care. You know, they they they're designed
to improve the patient experience, to improve the
health of the population, to reduce
the total cost of care health care in
the future and to reduce inequities of health
care. And so we build our networks around
high performing providers, organizations like, you know, like
Mount Sinai here in New York, like Orlando
Health in in, in in, in Florida, like
Bowers, Scott and White in Texas,
like MoroCare in California. These are organizations that
are delivering high quality, cost effective healthcare. And
we build our networks exclusively around them, really
allowing them to be accountable
for all the care in their
geographic footprint. And then what we also do
is we make sure that people, that members,
you know, that you know, think about you
know, we work with employers. So an employer
has employees that become our members, that become
our health care partners' patients, but they're the
same person. Right? Here's an employee or a
member and a patient. Well,
what these, what these members do is they
align themselves with,
with high quality advanced primary care providers,
like patient centered medical homes that are part
of these clinically integrated networks and ACOs
that really can organize
and coordinate their care throughout their their kind
of health care journey. And really have have
the organization. Again, this this these are teams
of people, you know, health you know, primary
care teams who are really thinking about the
health of the population that they're managing, thinking
about their each of their patients journey, providing
patient centered,
high quality cost effective care. And they're going
to help manage that health care,
you know, through the person's lifetime.
And we firmly believe and we've seen now
for over five years of experience
that building building networks with these great health
care providers and making sure that every member
has a, you know, patient centered medical home
level,
advanced primary care team
that is patient centered and really kind of
quarterbacking and coordinating their care, not only does
that significantly reduce cost right away, like, right
away, like, next, you know, next year, but
more importantly,
it also
improves the health of the population,
which
reduces costs in the future. And, again, we
work with with employers,
and so it is, you know, it is,
you know, it is people work for companies
and their family members. We've seen,
you'll see hypertensive control go up significantly, diabetic
control go up significantly,
early cancer detection significantly increase. And all these
things, you know, they bend the curve. Right?
And so these you know, by by making
sure that the population is you know, the
population of people are as healthy as they
can be and really, you know, watching out
for them, we can reduce the long term
cost of health care by working with these
wonderful health care providers that we partnered with.
And what we do is we do we
do what's called a value based contract with
them, where instead instead of getting paid for
every little teeny unit of care, you know,
we really work a, a value based arrangement
with them, which is as they deliver greater
value,
they they earn they earn great rewards for
that. And so it's it's really you know,
because, like, health care transformation can't happen without
health without payment reform. And we're trying to,
you know, with our health care partners, kind
of lead that payment reform to a pay
for value approach as a pay for, like,
each unit of of care. But that only
works if you're really working with these types
of health care providers that have organized themselves
in a way that they can deliver high
value care and also really giving them that
kind of control
like we do by building our networks really
exclusively around that. And so and so that's
the way, you know, our approach
to, you know, to fighting this problem with
rising health care costs. And what I would
say to,
you know, to to health care providers out
there is to find organizations
kind of like us that are that are
really trying to work with the health care
providers
to really, yeah, to
to meet those aims that we all have
the same aims. Right? We improve the patient
experience,
improve the population,
the the health the health of the population,
reduce the total cost of care, reduce inequities.
We we're all on the same side. So
health care providers
should find organizations like us to work with,
and employers should demand
for for their providers of health coverage that
they have a real viable long term strategy
to to make sure that their employees and
their family members are gonna have have access
to high quality health care that is gonna
be affordable now and affordable in five years,
ten years, and forever.
Fantastic. Well, Alan, take one minute.
Talk to our audience. Give us your last
bits of advice, all the health plan leadership
listening in from all over the country.
Last parting words you wanna share with them?
I'd say we gotta change.
I mean, you know, it's
we are and I know it it it
kind of becomes an old saw. It's like,
well, you know, health care costs are going
up so much. At some point, it's gonna
break.
It's going to break. And so we need
to change. You know, we if if we
are unhappy
with,
with with the cost of health care and
maybe the unequal delivery of health care in
this country,
we need to look at ourselves in the
mirror. And we're the ones in the industry,
and we're the ones who've created this. And
so we're the ones who need to change
it. And so, you know, challenge
the status quo,
you know, work with health care per health
care providers
and and and, you know, health insurance companies
or health plan administrators need to work together
to solve this problem. And we cannot accept
the status quo because the status quo has
taken us right off a cliff.
Alrighty. Good stuff. Alan, thank you very much
for taking the time to be with me
on the podcast, for sharing your insights with
our audience. We really appreciate it.
Thank you very much, Jacob. This was this
was really fun for me too, and and,
and hopefully, it was, it it'll be very
useful for all the listeners. Yeah. I definitely
think so. To our listeners, if you wanna
listen to more podcasts from Becker's Healthcare, you
can visit beckershospitalreview.com.