Ken Sperling, National Exchange Strategy Leader, Aon/Hewitt

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Mark Masselli: This is Conversations on Health C are. I am Mark Masselli.

Margaret Flinter: And I am Margaret Flinter.

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Mark Masselli: Well, Marga ret the countdown to October 1 continues.

Margaret Flinter: And that’s the day that people ca n start shopping online for
health insurance on the Insurance Exchanges . The online health insurance
marketplaces that were created by the Af fordable Care Act or Obamacare as it’s
known.

Mark Masselli: It is. And while a myriad of questions still remai n about how they
will function nationally and state by state we’re see ing a lot more information
emerge d ay by day.

Margaret Flinter: Well Mark, Health and Human Services Secretary Kathleen
Sebelius has just deliver ed a very up - beat update on the exchan ge , which will be
covering Americans in 34 states saying that they were on target to flip the switch
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on October 1 and that’s in spite of concerns that had been out there that this
was just too much of an undert aking to be able to meet that dead line.

Ma rk Masselli: Good for her and in fact she said folks seeking to purchase
insurance on the Federal Exchanges can start opening up accounts now by
going to their website healthcare .gov and setting up personal accounts to
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prepare for their actual health plan s selection after October 1 .

Margaret Flinter: The administration sees this as a way to generate early
participation in the exchanges which are expected to bring in millions of
uninsured Americans in the first year of operation and I think that was one of our
ideas they are to start now and get people prime d , don’t you think Mark?

Mark Masselli: It certainly was, but the small business exchanges have been
delayed until 2015. Many businesses were looking for the answers now about
what will be expected of them. The administration has releas ed an 800 number
for small business owners to call with any questions about their responsibility.

Margaret Flinter: I think that was a good idea. There were a lot of questions out
there and that number is 800 - 706 - 7893, that’s 800 - 706 - 7893. Now m any small
businesses will also be able to take advantage of tax credits once they provide
coverage to their employees. Really, in a way some of those who are purchasing
plans on the individual market. .

Mark Masselli: Y ou know Margaret we’ve been focusing much of our discussion
on the Affordable Care Act and how it will impact the 50 million uninsured

Americans, but there are another 100 million Americans already who ’ve gained
insurance coverage through their employers. And i t does beg the question , how
is the health care law impac ting large corporations and their insured employees.

Margaret Flinter: Well, our guest today is an expert on th at topic , Mark . Ken
Sperling is the National Exchange Strategy Leader at Aon He witt which is the
first company in the n ation to create a mu l ti - car rier health insurance exchange for
corporations and he sees exchanges as a growing trend in the corporate world.
That’s due to the competitive nature of the pricing on the exchanges and I think
a lso our desire to really drive quality of care.

Mark Masselli: Lori Robertson will check in from FactCheck.org. She is
dispelling rumors that are being bandied about on the s enate floor about the
health care law.

Margaret Flinter: But no matter what the topic you can hear all of our shows by
Go o gling chcradio and as always if you have comments email us at
chcradio.com or find us on Facebook or Twitter be cause we love hearing from
you.

Mark Masselli: We ’ll get to our interview with Ken Sperling in just a moment but
first, here i s our producer Marianne O'Hare with this week’s Headline News.

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Marianne O'Hare: I am Marianne O'Hare with these Health Care Headlines.
Aetna has pull ed out o f the running in another state insurance exchange.
Connecticut , one of the 17 states setting up its own exchange i s t he latest st ate
in which Aetna has decided not to try and engage in a competitively p riced
insurance exchange marketp lace , which have transparent pricing that is lower
than the current going rate for individual insurance. Aetna has also pull ed out of
exchanges in California, Maryland and Georgia. A s for the federal exchanges
HHS Secretary Kathleen Sebelius has announced that folks in the 34 states
relying on the federal exchange can open up accounts now in a first step towards
preparing to select an insurance plan on the federal exchange once they become
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available October 1 . Sebelius says the plans will be available for perusal online
in September. The political dissent continues over th e Affordable Care Act and
now there wa s a dissent within the dissenting ranks. Republican s and Congress
are split over a last ditch effort to derail the health care law . Some within
Republican ranks want ed to hold all government spending hostage when a f iscal
st
year begins October 1 , if there wa s any funding left in the budget to implement
the health care law. Conservative s like Taxes Republican Ted Cruz are behind
the measure which has been blasted by others within their ranks including
majority leader John Boehner. Electronic medical records may be your friend in
a digital age but you wouldn’t know it from consumer responses . A survey
conducted by the Wall Street Journal shows while 80% of the nation ’ s hospitals

ha ve switched to electronic medical rec ords or EMR s, only 24% of the
consumers are making use of them. Consumers are still reluctant to engage
digitally with their health information. And breastfeeding is allotted as a hedge
against obesity, allergies and other diseases after the baby has gro wn and one
more protective effect. Stuttering , a study out of the University of Illinois shows
that stutterers who are breastfed had a much better chance of returning to
normal speech than those who weren’t. The study found that for those who are
breastf ed for more than nine months there was a consistent showing of improved
language development. Researchers believe the magic is in the long chain fatty
acids in human breast milk , which promote healthy brain development . An
infant ’ s brain triples in size in the first year of life. I am Marianne O'Hare with
these Health Care Headlines.

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Mark Masselli: We ’ re speaking with Ken Sperling , National Exchange Strategy
Leader at Aon Hewitt which is the first company in the nation to create a multi -
carrie r health insurance exchange for corporations. Mr. Sperling co - author ed the
textbook ‘ The Fundamentals of Flexible Compensation ’ and h e ha s advi s e d
members of Congress in the administration on the development and the
implementation of health care reform le gislation. He serves on the advisory
boards of the University of Connecticut’s Health Management Program and the
American Benefits Council . Mr. Sperling , welcome to Conversations on Health
Care.

Ken Sperling: Thank you , Mark.

Mark Masselli: Ken, we’ ve talk ed a lot about the Affordable Care on this show
and much of the discussion both here and across the media land scape is really
focusing on the 50 million uninsured Americans and bringing them into the health
care system. You’ ve spent a good part of your lifetime analyzing the health care
industry through the lens of the corporate world. So let ’ s take a look at what’s
happening at the corporate world and Aon Hewitt advices 70% of the nation ’ s
Fortune 500 companies in this country and health care repr esents a substantial
part of their bottom line. So, how do you see the nation ’ s major employers
changing or evolving health care compensation in the context of the Affordable
Care Act?

Ken Sperling : Well Mark, employers currently spen d over $ 10,000 per employee
on health care and that’s about 2012 number. And that number has been
increasing over nine percent annually over the last five years and it’s really
hindering American Corporation ’ s ability to compete in that global landscape.
That said, health care has been an important part of total rewards and the HR
deal with employees and employers are not planning on dropping coverage or
sending employees over to the S tate or Federal Health Care Exchanges. They
are going to stay in the game but they are tr ying to find different path s to find a

sustainable growth rate on health care cost. T he absolute number is troubling
but what is even more troubling is the rate of increase. So , trying to find a way to
keep health care cost increase is closer to the rate of general i nflation or CPI has
been a real challenge and what corporations are trying to do now is looking for
those different path s either through improving the overall health of their
population or looking at private exchanges as a way to control the o verall rate of
the increase.

Margaret Flinter: We ll, Ken, I know we ’re going to z ero in more on cost s in a little
bit but let me focus right now on the insurance exchanges. Th ere is still a lot
unknown about how the state and federal exchanges will func tion in practical
terms and the Affordable Acre Act created this framework for setting up th e
exchanges to buil d the online m arket places but the corporate insurance market
can’t happen to the state and federal and small business exchanges for a couple
of y ear s now till 2017 . You’ve established a corporate exchange which has been
up and running since last year I understand. So, share with us, how does your
exchange look like and differ from the government run exchanges. What have
you learned from those ex changes that are being set up and maybe what in turn
could the government exchanges learn from what you’ve done?

Ken Sperling : So Margaret, we love the exchange concept not just as it applies
to insurance but it applies to the general marketplace. And i f you think about it
Amazon , Orbitz, Zappos, th ose were all exchanges. Th ose are all online retail
marketplaces and probably th e most famous exchange is New York Stock
Exchange. So this is a marketplace where b uyers and sellers come together and
it’s a v ery efficient market place and we love that concept. But we didn’t want to
wait u ntil 2017 when large companies had the ability to take advantages of these
marketplaces. So, we decided to go with ourselves. And the concept of a
market place where c onsumer s can work with their feet is probably the best way
that employers can hope to control health care cost s going forward because in
every retail marketplace w hen you have competition prices go down every time.
So what we borrowed with the concept so we’re c alling the plan that people can
enroll in bronze and silver and gold and platinum because we want to get away
from insurance jargon that really nobody understand s . So those a re the things
that we borrowed . What is different is our exchange has group cove rage just to
s ell employers - sponsored plan. It’s not a big pool where everybody kind of get s
the same rate. Every company gets their own separate rate when they
participate in our exchange because if a company really does well in managing
the health of t heir population, their employee should benefit from lower rates.
We have standardize d the design to make shopping easier because one of the
things that it really frustrates consumers is you know I have to spend you know
30 minutes to see what my physical therapy might be between one choice that I
have a n d another that doesn’t make any sense. So, down t o a 180 different plan
design provisions it’s all the same to make that shopping experience easier for
the consumer.

Mark Masselli: And you recently did a survey of the nation ’ s largest employers
tr ying to engage in what they would like to see in health insurance funding
mov ing forward. Your survey show ed that most are committed to offering their
employees continued compensation for health insurance covera ge but the model
is changing. Is it possible that some corporations will look to just totally get out of
this HR world, it’s being commoditized on the e xchanges, but there are others on
the other side who are saying, we have a vested interested in our emp loyees, we
want to make them healthy, but we also want to control our cost. Tell us what’s
going on?

Ken Sperling : Employers as you say have a vested interest in the health of their
population. They care whether or not people come to work everyday and when
they show up for work then they ’ re productive. And it’s not just the health
insurance issue, it ’s absenteeism and productivity and disability and when you
add all those things together the cost of a sick worker is an asset . It’s more than
just t he cost of the health insurance . It’s an overall productivity issue and that’s
what will keep employers in the game. From a financial standpoint, if an
employer doesn’t provide health insurance the Affordable Care Act assesses a
penalty. That penalty is de sign ed so that an employer ha s to really think twice
about abandoning heath insurance coverage for their employees. And the way
the Affordable Care Act was design ed is to try to firewall the employer - sponsored
system and keep it intact . The Affordable Ca re Act w as designed to provide
access to in surance coverage and subsidize d insurance coverage for the 50
million people who currently do not have it today. It was not designed to replace
the employers sponsored system and the penalties that are in place e nsure that
that’s not going to happen.

Margaret Flinter: Ken, you’ve talk ed about the market forces driving down the
cost s and I’d like to focus in on the transparency part of the equation and ask you
how transparency in the insurance marketpl ace is real ly changing the game?

Ken Sperling : Sure. When you think about the premiums and what is driving
down premiums , it’s not, it only a transpar ency issue, it’s around c ompetition.
And as we said, whenever you have competition in retail marketplace, prices go
down. You also have another parallel movement going on in the employee
benefits landscape and that is the movement away from five and ten dollar co -
pays to hi gher deductibles a nd have more cost sharing on the employee side and
that’s just a reality of the fact that you know, we as consumers and we as
employers and we as a nation just can’t afford to provide a 100 % coverage for
health care for every service. As we move to additional cost sharing and people
a re exposed to funding the cost of a doctor vis it or a prescription drug and what
those things costs become really important. And, you know, there is a big
difference between the prices of MRIs even within the same city. You can get an
MRI for $700 and you can get the same MRI at a different place fo r $2,500 .
Does a consumer have a right to know those differences? Absolutely . But as
you say that’s been kind of shrouded in secrecy and the market is demanding a

greater cost transparency and information on quality so they can make in formed
purchasing decisions. So, we’re seeing a shift to empowering the consumer but
you can’t just annoy somebody of health care consumer and not give him the
information that they need to make a good decision.

Margaret Flinter: Right.

Ken Sperling : So, the marketplac e is moving rather quickly to providing more
information to consumers to help them make informed decisions.

Mark Masselli: We’re speaking today with Ken Sperling , National Exchange
Strategy Leader at Aon Hewitt which is the first company in the national to create
a multi - car rie r health insurance exchange for large corporations. Mr. Sperling is
a sought after health analyst on Wall Street and is co - author of a textbook ‘The
Fundamentals of Flexible Compensation’. Ken, you said a lot there and I was
just trying to think about the role that the corporations have had in trying to
control cost . I think going back to Lee Iacocca where you try to get into the
health care and where the corporations for years have been trying to sort to
throttle down the cost , i t seems like they’ve abandoned that strategy in some
ways and said , you know, really it’s bigger than we are. The health care empire
18% of the GDP, we really can’t control it. So, now what we’ve decided to do is
just shift the cost over to the employee hoping that maybe we will get them
engaged in this conversation and control cost. But cost seemed to be the big
driver . How are employees being helped to better under stand their health care
options and enroll in plans that are best suited to them?

Ken S perling : So, the decision support is very important especially when y ou
give people multiple options w hich is essentially what hap pens in an exchange
environment. You are giving an employee a fixed amount of money and you’re
giving them option s to choose from in terms of coverage and in terms of which
insurance company they might want to buy it from. So, you have to support that
consumer with a valid and relevant decision support tool so they can make an
informed decision. You have to allow them to look to see if their doctors are in
the network . If they need help deciding which plan is right for them, how much of
a deductible could you afford a nd different people are going to come out in
different way s. And in our exchange what we saw last year was wh en you give
people all of these options, we saw 42 % of people bought a lesser amoun t of
coverage than they had and put the difference in their pocket in terms of lower
payroll contribution s. About 33% of people staye d approximately where they
were, but th e remaining 26 % of people bought up, they bought more coverage
than they had before and that’s fine. People got what they wanted and that’s the
important thing.

Margaret Flinter: So, Ken, when I think about the corporate exchange that you’re
setting up in the tens of millions of people who may get their insurance through it,
but I can have the image of either a giant business corporation or a giant public

health organization in my mind simultaneously. And the reason the public health
idea comes to my mi nd is because you potentially have the ability to really drive
some changes in work culture, employment culture around wellness and around
improving the health of wo rkers. There has been so much resear ch in this area
in recent years so much more that need s to be done. Don’t you like to give us
your insi ghts on what you see are some of the most promising strategies?

Ken Sperling : So, what we’re finding is the wellness and he alth improving
landscape is evolving. What well - placed wellness programs have be en in the
past is really scattershot that employers have kind of put out to employee s, they
have had a menu of things that they made available. So , what we found was lots
o f programs, limited use and kind of sketchy return on investment. Where we are
now and where we’re going is a ze r oing in on those programs that have the most
impact on improving health and managing chronic disease. So, spe cif ically
nutrition and exercise because obesity is probably the center of all evil when it
comes to what generate s chronic disease and health care cost s . What
employers are finding out is that if they can increase the level of exercise of the ir
population and people can eat better just focusing on those two things, get the
80 % of the way there. So, rather than have a whole bunch of programs that
nobody uses they’re focusing on putting incentives in place and putting focus on
just those programs that have the most impact for their population.

Mark Masselli: Ken, j ust take me back a little on the sort of formation in y our
mind of the exchanges you alluded a little to their lots of exchanges going on but
who was this sort of the original thinker on bringing this over the corporate world
and what does it look like if you’re an employee in a corporation and talk a little
bit about where it ’ s headed?

Ken Sperling : So, our exchange launched in fall and Roman of 2012 wit h
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coverage effective January 1 , 2013 serving over a hundred - thousand
employees representing over 200,000 covered lives. We are expanding that in
Roman C ount for 2014 substantially and there are other exchanges that are
coming into the marketplace that will also serve, you know, other companies.
What does it feel like to an employee, well it kind of feels like A mazon , or Zappos
or Expedia. So, you know, you come out to the exchange website and the
company says here is how much you get to spend and then you see Aetna and
United Health Care and Cigna and Blue Cross and Kaiser and the health plans
that are available to you, and you see bronze and silver and g old and platinum
plan. And then, you have the decision support tools that are available to you to
say, show me just the Aetna plans, show me just the bronze plans or help me
decide based on how many times I think I’m going to go to the doctor and what
dru gs I take and help me narrow my choices to a three or four relevant few that I
am going to use to make my ultimate decision. So, it feels like a retail shopping
experience but just for health care .

Margaret Flinter: We’ve been speaking today with Ken Sp erling, National
Exchang e Strategy Leader at Aon Hewitt the first company in the nation to create
a multi - carrier health insurance exchange for corporations. You can learn more
about his work by going to www.aonhew itt.com . Ken, thank you so much for
joining us in Conversations on Health Care today.

Ken Sperling : Thank you Margaret.

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Mark Masselli: At Conversations on Health Care , we want our audience to be
truly in the know when it comes to the facts about health care reform and policy.
Lori Robertson is an award - winning journalist and managing editor of
FactCheck.org, a non - partisan, non - profit consumer advocate for voters that aim
to reduce the level of deception in US politics. Lori, what have you got for us this
week?

Lori Robertson: Well , we’re continuing to see this information about the
Affordable Care Act. This time Senator Roy Blunt wrongly said that th ere was a
ply for federal subsidies to buy insurance could lie about their income with “ no
way to verify that”. Blunt made the claim in July shortly after the Obama
Administration announced that it was delaying for one year, the requirement that
employers with fifty or more full time workers provide insurance or pay a penalty.
The Missouri Republican claim ed that the administration had also “waived the
income verification requirement” but that’s not true. All income claims on subsidy
applications will be checked against available federal info rmation s uch as,
previous tax filings those who d on’t have previous filings will be asked for more
details. The rules to which Blunt referred pertains the applicants who claim
household income more than ten percent below what government data show and
w ho had given insufficient explanation for the change and for whom current
information is unavailable. So , the old rules said the exchanges would have to
seek further verification for all such applications. Now, they only have to check a
statistically significant sample of the suspect applications for 2014 . So, folks who
want to lie could n’t take the gamble that they’d flip through the cracks and get
away with it. But the IRS will still double check what they say w ith 2014 tax
returns filed later. The IRS can rec oup subsidy payments and there are hefty
f ines for committing fraud. And that’s my fact check for this week. I am Lori
Robertson, managing editor of FactCheck.org.

Margaret Flinter: FactCheck.org is committed to factual accuracy from the
countr y’ s major political players and is a project of th e Annenberg Public Policy
Center at the University of Pennsylvania. If you have a fact, that you ’ d like
checked, e - mail us at chcradio.com. We will have FactCheck.org’s Lori
Robertson check it out for you here on Conversations on H ealth C are.

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M argaret Flinter : Each week Conversations highlights a bright idea about how to
make wellness part of our communities in everyday lives. Smoking bans across
the country have yield ed a countless health benefits in myriad ways reducing
smoking related illne ss and death. And w hile smoking in most buildings and
public establishments has been bann ed across the country for years, i t’s still
ubiquitous practice in most of the nation ’ s casinos subjecting employees and
patrons of these establishment s to secondhand smoke exposure. The State of
Colorado recently passed a ban on smoking in the states casinos and the results
have been dramatic . Once smoking was banned the number of emergenc y
ambulance calls dropped by 20 %. Dr. Stanton Glantz, Director of the Center for
Tobacco Control Research and Education at the University of California, San
Francisco says it’s really a pretty simple equation. Long - term exposure to
secondhand smoke increases the risk of the development of blood clots that can
block arteries causin g an attack.

Dr. Stanton Glantz: There is the long - term effect of increasing atherosclerosis
but there is also less acute triggering effect. And even a few minutes of
secondhand smoke exposure is eno ugh to make your blood platelets get stickier .
And wh en that happens they are more likely to form a blood clot and if that blood
clot lodges in an artery in your heart it causes a heart attack. So, you c an have
people who never smoked in their lives who walked into a smok y casino and a
short - term exposure i n that casino can actually trigger a heart attack.

Margaret Flinter: The American Heart Association has applauded the first of its
kind s tudy supporting the smoking ban in casinos and hopes that operators of
casinos around the country take note.

Dr. S ta nton Glantz: The clear implication of this work is continuing to permit
smoking in casinos sending people to the hospital and it’s not doing it next month
or next year, it’s doing it right now. And a 20% change in the number of
ambulance calls, you know, I mean that’s very substantial.

Margaret Flinter: A smoking ban in casinos populated by thousands of people
eliminating secondhand smoke exposure to those people and significantly
reducing s moking related medical emergencies, now that’s a bright idea.

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Margaret Flinter: This is Conversations on Health C are. I am Margaret Flinter.

Mark Masselli: And I am Mark Masselli. Peace and health.

Conversations on Health C are, broadcast from the campus of WESU at
Wesleyan University, streaming live at www.wesufm.org, and brought to you by
the Community Health C enter.