This episode features an interview with Christian Moreno, Executive Vice President of Lockton. With more than 20 years of experience, Christian specializes in designing health plans that are fully integrated with wellness solutions, helping employers manage the demand side of healthcare. In this episode, Kirk and Christian discuss strategies to manage healthcare cost volatility, the efficacy of wellness programs versus high-cost medications, and the potential shift towards narrower networks to contain costs while maintaining quality care.
This episode features an interview with Christian Moreno, Executive Vice President of Lockton. With more than 20 years of experience, Christian specializes in designing health plans that are fully integrated with wellness solutions, helping employers manage the demand side of healthcare.
In this episode, Kirk and Christian discuss strategies to manage healthcare cost volatility, the efficacy of wellness programs versus high-cost medications, and the potential shift towards narrower networks to contain costs while maintaining quality care.
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“ I don't know that you can make this just an employee decision at the end of the day. It's going to have to happen further upstream if we want to have a seismic or substantial impact on cost. If we're just talking about physician A versus physician B, but I can still choose to go within any hospital system at any time with total freedom. If we are going to leave it up to employees and just make it a broad PPO network, I don't know that they have the information just yet to make those decisions. It's going to have to have come from intelligent data tools in their hand. It's going to have to have assistance from the TPA and it's going to have to have assistance from the ecosystem around the member making those decisions.” – Christian Moreno
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Episode Timestamps:
*(00:51): Christian’s career journey
*(02:31): Volatility in healthcare costs
*(10:12): Wellness programs and GLP-1s
*(20:28): Network design and future strategies
*(27:49): Driving employees to high quality providers
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Links:
Connect with Christian on LinkedIn
Learn more about Collective Health
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[00:00:00] Kirk McConnell: Healthcare costs are rising, benefits are confusing, and the system doesn't always work for the people who need it most. But it doesn't have to be that way. Smart employers and their brokers are flipping the script, cutting costs, making things simpler, and creating a health benefits experience their people love.
[00:00:21] Kirk McConnell: Welcome to the Benefits Playbook. I'm Kirk McConnell, and in each episode, we uncover the bold strategies that are rewriting the rules of self-funded health benefits. Today I'm thrilled to be joined by Christian Moreno, Executive Vice President of Lockton. Christian, thank you so much for joining us today.
[00:00:39] Christian Moreno: Thanks for having me, Kirk.
[00:00:41] Kirk McConnell: And so there's a lot that I'm excited to dig in with you today. Thinking about cost, volatility, wellness, the idea of broad access versus navigating. Well, let's start with you. Walk me through kinda your path to Lockton.
[00:00:55] Christian Moreno: Yeah, I had an interesting path to Lockton. I joined Lockton in, let's see, it would be 2011 if I'm dating myself a little bit.
[00:01:03] Christian Moreno: It's been a while. Prior to that, spent the first part of my career working for an actuarial consulting firm in South Africa with a touch of Singapore, and then landed back in the United States in the consulting world. I spent some time at the Cooper Clinic running their employee benefits advisory practice.
[00:01:20] Christian Moreno: And then strangely enough, we ran into healthcare reform where all of a sudden scale mattered. You had to be very good at a lot of different things. And when I surveyed the landscape, I started knocking on Lockton's door because it felt, and I think I was right, they were the best place to do what I do and what we do together in the people solutions, risk management and human capital sector.
[00:01:43] Christian Moreno: And so after joining them, as long as they'll have me, I'm gonna stay here and hopefully finish out my career.
[00:01:48] Kirk McConnell: Tell me more about that. What do you think really makes Lockton stand out?
[00:01:52] Christian Moreno: So as I think about our structure that allows for a client centricity, client intimacy, that I think is pretty rare in our industry, we are still, let's see, 58-year-old business now, 100% owned by the Lockton family, which allows us, I would say, a level of freedom by not involving outside financial forces.
[00:02:13] Christian Moreno: Whether that be financial sponsors or the public markets. This allows us to think long-term and then deliver solutions that I think are more client-centric and give us the freedom to kind of put our arms around the client solutions without interference from other financial levers.
[00:02:29] Kirk McConnell: You talk about putting your arms around clients. One of the interesting things that I've heard you talk about in the past is you sit down with clients right now. So often the headline conversation is, oh, medical trend is projected to be at 9% next year. You have a slightly separate point, which is, trend is important, but volatility is a really messy part of benefits today too. Tell me more about what you mean by volatility.
[00:02:53] Christian Moreno: I think that the headline of the last, I don't know, 3, 5, 7 years, is the advent or the reasonably sudden inclusion of very expensive gene therapies and other classes of drugs that far exceed the cost prior to that.
[00:03:13] Christian Moreno: So if you were to take a colored vase and fill it with marbles of a particular color, 10 years ago, it would've been mostly one color. Let's just take red marbles. Over the last five to seven years, we've began adding significant other colored marbles that at the draw of that marble would indicate a significant claim. So we are driving a significantly greater statistical likelihood of these types of claims hitting any particular mid-market employer.
[00:03:48] Christian Moreno: And that when we're looking at the budgeting process, right, when we look at what is the number in a given year, say five to $7 million in spend. The degree of accuracy of that isn't necessarily down. What's happening is the volatility around that number, the swings, the sort of indexing of that number to the advent of these large costs claims is driving a volatility around that number that I'm not clear that the market has yet figured out how to socialize.
[00:04:22] Christian Moreno: Or to better predict for middle market employers, right? So the larger the employer, the less meaningful that claim may be in any one instance. But when we come down, say, below a thousand employees, any one of those claims or any several claims can significantly blow a budget. So we're spending a lot of time in that space with the financial executives and the HR teams at our customers trying to get our arms around how do you evaluate that? How do you manage it? More importantly, how do we club for that in a budgetary framework?
[00:04:54] Kirk McConnell: What coaching would you have for the benefit leaders out there who are bringing their financial executives on the journey with them? And they need to explain to that executive, it's not just the trend, but the volatility makes it tough for us to predict exactly where we're gonna fall. How should benefit leaders be having that conversation?
[00:05:14] Christian Moreno: I think it's an asterisk or when we think about, I don't know, just take something like stock market volatility. There's a measure, I think it's called the VIX. It's a variance measure, right? It says how confident are we in the current state and how variable is it likely to be in future time periods?
[00:05:35] Christian Moreno: I think the HR team can work with the consulting team and the actuaries to apply a standard level of comfort, an indexation of how much volatility might we assume in this and work with finance to either cushion the number by adding margin or look at alternative purchasing strategies to mitigate or suppress that volatility, whether that be multiple stop-loss year purchasing or captive arrangements to smooth, right?
[00:06:05] Christian Moreno: We're not necessarily purely shifting risk here from an HR standpoint, the language to the CFO or to the financial executives, I believe is about either removing volatility via the purchasing arrangement or strictly smoothing it so that it reduces the sort of that unknown unknown.
[00:06:24] Kirk McConnell: I have to imagine though that that volatility makes it tough to judge success at the end of the year, because if you are under your trend, was that just awesome management or was that a misforecast? How do you think about that tension?
[00:06:40] Christian Moreno: It's always an awkward discussion when you come in 10% under budget in the consulting world 'cause everybody wants to launch fireworks and celebrate, right? We all look at what we did, but if that is a function of simply getting lucky on the three and a half gene therapies we might have thought you had and you didn't have.
[00:07:03] Christian Moreno: Well then the problem is are we budgeting the following year off cash and actual, or are we budgeting off budget to budget? So in some sense is missing to the good, makes the conversation in future years harder.
[00:07:15] Christian Moreno: So I think it has to be grounded in the budget was based off of what we think actuarial norms are for a particular population, irrespective of where we finish to the good or to the bad, we have to realign to that centerpiece of where were we and what do we reasonably think we could see next year. And I think if you finish to the positive, it can make that conversation certainly more animated when we have the following years of financial forecasts discussion.
[00:07:47] Kirk McConnell: When you think about the volatility, what do you think is making that such a wide variance right now? Is it GLP-1s, gene therapies? What do you think is driving the most of it?
[00:07:56] Christian Moreno: I think it's a mix. Certainly when you see the cost of the, what is it? 20 or some, I'm estimating here, 20 plus gene therapies on the market today, many of which are in the millions.
[00:08:12] Christian Moreno: I think that the more therapies that come online, the more say, I'll just use this, the more double zeros we add into the roulette wheel spin. This is the piece that I think is causing volatility, at least in larger swings, but without a doubt, the advent of GLP-1s both for diabetics as well as the anti-obesity medication, whether or not you cover drives a significant variance.
[00:08:39] Christian Moreno: We can all probably in the consulting world tell stories of those who covered the anti-obesity medications and saw a substantial budget miss as a function of that and not to say anything about whether they should or shouldn't be covered. It was impossible, what, seven years ago, eight years ago, to know that we would've had drugs in the market that can hold what?
[00:08:59] Christian Moreno: 20, north of 20% sustained weight loss over time to say nothing about side effects or recidivism or anything like that. I think these drugs are here to stay and they represent an existential risk in the sense that they are going to get less expensive, not more. And as they get less expensive, employers are going to be having a more full throated discussion around covering them, right?
[00:09:26] Christian Moreno: Using an extreme example, if we were to make these drugs $200 a month. Net of rebates, most employers would be looking at covering them. Okay, well what happens if 40 or 50% of the eligible population starts taking these medications? It simply just changes the financials. It doesn't change the fact that these drugs are so impactful to that eligible population that employers need to be thinking about them differently, not whether or not they will cover 'em.
[00:09:56] Christian Moreno: When they do, how will they, and under what conditions and what disease management, utilization management protocols, there's no question in the upper end of the middle market, say north of a thousand to 2000 employees, that's a significant driver of volatility.
[00:10:12] Kirk McConnell: I'm gonna ask a controversial question. So I know you think a lot about wellness programs. You also mentioned GLP-1s. It's tough to ignore the impact they're actually having. That 20% sustained weight loss are GLP-1s, the modern wellness strategy.
[00:10:30] Christian Moreno: You know, I've spent so much time in wellness programs over the last, it's been on and off for 30 years. Having spent time with the Cooper Clinic, the Vitality Group.
[00:10:42] Christian Moreno: And I think that the question is a fair one. But for some time, behavioral economics has been clear on wellness programs are essentially an attempt to create a present value for a given member of future health risks. Right? So it's, the goal of those program was to say, if you live a healthier lifestyle, downrange, these things will happen.
[00:11:10] Christian Moreno: Or said another way, downrange, some of these bad things won't happen. It is at least fair to say that there have been mixed results and I think I'm being generous here of most wellness programs over the course of the last 20 years. Right. I feel like if there was a wellness program that was so effective that it changed an entire employee population's health en masse fast enough to overcome any turnover or mechanical issues in the wellness structure, then we would know about it.
[00:11:41] Christian Moreno: So I think HR, finance, human capital decisions are going to be based around, if we're spending X on wellness today and it's not giving us a return, will we be forced to make a decision between wellness programming and GLP-1 slash anti-obesity medications potentially.
[00:12:01] Christian Moreno: In particular those organizations with gray collar, blue collar exposures where workers' comp, safety, OSHA recordables and the like drive a significant cost. Well then the quote unquote ROI calculations may usher in that coverage faster. I certainly would tell you that if I was in the wellness space today, as most wellness, I say vendors or administrators are, they're thinking more broadly about wellness and moving from just the physical wellness into mental health, into obesity medication management 'cause I think the conversation is gonna broaden at a minimum to include those, if not almost exclusively, focus on those areas.
[00:12:46] Kirk McConnell: One of the things you're mentioning is that wellness in a lot of ways is about thinking about future costs, but making them more present and real or to their current member and to some extent their current employer.
[00:12:57] Kirk McConnell: As you think about wellness strategies, how does employee tenure play into that? Does a longer tenure mean a different wellness strategy?
[00:13:06] Christian Moreno: Put simply, yes. I think employee tenure matters because the longer the employee is with you on average, either means the condition costs you more if unaddressed or the savings is more real if addressed.
[00:13:21] Christian Moreno: And that's unique really to this wellness program, anti-obesity medicine discussion right now. It's not as though we ask this about really almost any other medication or program, right? But in this case, you have to have the employee long-range enough in order for that to make sense, either through wellness programming design, right?
[00:13:47] Christian Moreno: So whether you set up a penalty or incentive platform and or the coverage of some of these anti-obesity medications, because the timescales don't always match up, right? If we're thinking 10 years out. In terms of an ROI picture, IEI pullback on prediabetes and these are hypertensive patients I don't have, right?
[00:14:09] Christian Moreno: These are the questions. In a tenure scale, if I'm losing people every two to three years, the financial picture just doesn't make sense just yet. Again, that's why I think that the input costs of the drugs matters so much. It's high enough now where we're not even having the discussion as that comes down incrementally.
[00:14:27] Christian Moreno: You'll see employers with longer tenure, higher disease burden, self-insured and reasonably exposed workers' comp begin to consider coverage. And from there it will domino on down as the costs come down. But for right now, it's more of a no or a not yet than we've heard in some years.
[00:14:47] Kirk McConnell: You know, the headlines are right now that you can get some of those drugs now for $499. What do you think the inflection point is? What's the dollar threshold where the conversation changes?
[00:14:57] Christian Moreno: Depending on the rebate structure, right? The rebate structure drives a lot of these decisions. For a whole host of reasons, I think it's gonna have to come down to a sub $200 a month net cost. I think right now I was looking in the most recent, just $20 to $30 per employee per month.
[00:15:15] Christian Moreno: If you add it right, if you were to smooth that across the population, I think it's gonna have to come down by half. In order for it to make sense for the averaged tenured, and again, I reiterate this, I don't think it's being discussed enough.
[00:15:29] Christian Moreno: The part of the equation that just isn't being brought in is if we look at things like return to work from a workers' comp incident severity, we look at injury rates, repetitive motion. So you think all of the affiliated costs with that simply aren't being baked in, arguably because they're managed on the different side of the organization. But I think the drugs are gonna have to come down by half and then we're gonna have to start to contemplate those costs so that the ROI picture is a full mosaic of the actual cost, not just how much is the cost to the health plan and how quickly can we avoid a, a diabetic patient. It's too myopic and not a full picture.
[00:16:07] Kirk McConnell: Christian, the sense you give is in a lot of ways we're kind of in the messy middle of wellness right now. We've outgrown the stereotypical step challenges. Of the early two thousands, and yet we're still waiting for the GLP cost maybe to come down to a more usable place. As employers start thinking about their wellness strategy for 2026 and beyond, what conversations or questions should they be having?
[00:16:32] Christian Moreno: What does victory look like? I've always asked this of our customers, which is are we inside of a self-insured ERISA plan compliant wellness program? Assuming we're giving everyone whether or not there are planned participants access to the wellness program, is the goal to meet a human capital need, is it to offer additional benefits such that people can access better mental health care, learn more about their health.
[00:17:05] Christian Moreno: Or is the goal to offer, I'll say a more draconian, more heavy handed platform wherein we say victory for the organization is a better balanced subsidy policy around our medical plan. So if you don't meet or exceed, you know, certain health thresholds, whether they be biometric screenings or others, you're gonna pay more than those who do.
[00:17:30] Christian Moreno: That's really just a different way to cross-subsidize the health plan, right? We're just charging those who choose not to comply more than those who do. I'm Switzerland on that structure until I think the employer can define what victory is. Do we want to hammer down on comorbidities and polychronic members? Whether through medication or lifestyle modification programs, meaning are we Switzerland on that?
[00:17:57] Christian Moreno: Are we completely ambivalent about how they get there? Okay, well then that says we're gonna need to focus in on members with chronic conditions. We're gonna need to offer resources, coaching and otherwise, and then we're gonna have to provide an incentive structure or penalty structure that flanks or supports that strategy.
[00:18:12] Christian Moreno: But offering wellness programs strictly for the sake of offering wellness programs is often throwing good money after bad, and I might add, there is substantial data to say it just hasn't worked. Doesn't mean it won't work, and it doesn't mean we shouldn't do it. And then lastly, I'd say we and the customer in question has to have their arms around cohort data.
[00:18:37] Christian Moreno: So what does population in year one, year two, year three, over the areas of the key performance indicators look like? Are you winning or are you losing? And I think a candid discussion between HR and finance is really one of our key jobs. Sometimes the programs don't work. Sometimes they do. The more narrow, the more targeted, the better.
[00:19:00] Christian Moreno: But I really do think it has to be framed around a two to five year plan of what victory looks like in a constant measurement through data. Otherwise, we are offering a wellness program just to say we have one. I don't think most employers do that, but I do think a well-defined victory strategy makes a big difference in where the spend goes.
[00:19:21] Christian Moreno: Right. Should it go here? Should it go there? I use this analogy, I'll give credit, I believe to Michael Lewis, but you're essentially playing Moneyball, right, inside of a total rewards program, and more specifically inside of a health and welfare offering. We only have so much money to spend, right? So inside of that total dollar, how much do we want to allocate here?
[00:19:40] Christian Moreno: And what level of productivity or return do we wanna get off of that 10 cents or 8 cents of the dollar? And I think if we play in that zero sum game. We will make better allocation decisions as it relates to wellness and arguably across the entire health and welfare program,
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[00:20:28] Kirk McConnell: Another area where narrow versus broad comes up, especially in terms of allocation dollars, is do we think the future looks more like broad medical networks or narrower or more directed medical networks? Where do you see the puck going on that one?
[00:20:45] Christian Moreno: I'm old enough to remember. I think the first medical plan I was ever on was an HMO. I'm fascinated how the pendulum swings. Right. It went from there to the broad-based PPO. Then came the point of service, then back to the PPO. And then we had this brief stop where we thought, Nope, narrow networks are gonna solve it all. ACOs, we've figured it all out, right? Risk-based pricing, and we're gonna tie in performance-based metrics into the payment system and away we go.
[00:21:13] Christian Moreno: And here we are, what, 2025? And if we were to look at the broad, let's just say BUCA networks, it's what, 96, 95% of all available physicians countrywide and something like 92% of hospitals, and I, I'm using estimates there are in network, in my estimation, that's not a network, that's just retail. Right. We are in a position where employers are seeing significant increases in trend, both on the pharmacy side as well as on the medical side.
[00:21:50] Christian Moreno: To have close to 100% network participation simply will not stand the test of time with employers. I don't know when the breakpoint is, but I think the pendulum may swing back and it may swing back with some severity if the employer is still the large single source place where employees seek or purchase healthcare coverage, right?
[00:22:15] Christian Moreno: For good or for bad. If that is the place in which they seek it, employees seek purchasing healthcare through that entity. And I don't think the PPO network as it stands today can stay as it is. We're gonna have to start creating tranches or bifurcate by cost and quality and use steering and more effective TPA relationships to steer members to high quality, low cost. And I think that day is coming. When? I wish I could predict, but I cannot.
[00:22:43] Kirk McConnell: What do you think that steerage looks like? Do you think it's just narrow networks? Do you think it's more thoughtful plan design with incentives? Do you think it's maybe more proactive navigation through things like advocates and third parties or quality data?
[00:22:57] Christian Moreno: I'm gonna say all of the above. Let me get specific. If there's, I don't know, let's say 400 endocrinologists in the DFW Dallas Fort Worth area, let's just use a rough number of those. There are those that have better patient adherence, better patient outcomes better, and those that also of that subgroup have either a lower unit cost or a lower total cost of care.
[00:23:23] Christian Moreno: If we can agree on that, well then there is some net network, some secondary network, maybe primary network we wherein an employee could choose. And from there if we had that sort of just bifurcation of cost and quality right. Then the plan design comes in, right? Because you wanna steer the member in the decision making.
[00:23:45] Christian Moreno: If anyone's ever tried to search for a physician of any degree of specialization, it is a very difficult decision to make based on, I would argue, limited quality. Therefore, the steering has to happen further upstream. And then at the member decision point, I think there needs to be steerage either through plan design.
[00:24:05] Christian Moreno: Or through copay assistance so that the member can understand, well, this must be one of the ones that I should go see and steer, but I think it's gonna have to be a blend of both.
[00:24:14] Kirk McConnell: What lessons do we learn from high deductible plans in the mid-2000s? Because I think there was the hope there that plan designs with clearer financial incentives will drive better decisions.
[00:24:28] Kirk McConnell: I think the data there is probably mixed and that's generous about did it actually help people make better choices? So if we're gonna use plane design to drive people to higher quality, what do we learn from high deductibles?
[00:24:40] Christian Moreno: It's a mixed bag, I agree. I worked with some of the first consumer driven health plans back in the medical savings account days in a post-apartheid South Africa.
[00:24:50] Christian Moreno: It would've been what, 2000 to 2002 or 03. And what you find when you look at the data, right, if you were to break the populations in a given medical plan of a high deductible plan with a medical savings account or health savings account, right? You find that there are the healthy that didn't claim much, and they end up rolling over substantial ballots, they win.
[00:25:11] Christian Moreno: Whereas on a typical PPO, they would've lost. And then you have the super high claimants that, arguably, their out of pocket is fairly neutral. The people that it really frustrates, and I think where the thought that the change would happen was in the more frictional use of healthcare, right? The intermediate user, the one who may or may not go in or outta network or may choose, Hey, I probably need an MRI, so I'll go to this place.
[00:25:36] Christian Moreno: The results on that are pretty clear. The consumer isn't making cost decisions as a result of the high deductible plan en masse enough for it to save money. Now I'll say this, does that mean a high deductible or health savings account plan isn't a good idea? No, I just think it was sold on the wrong premise.
[00:25:58] Christian Moreno: I mean, if we were to look at a high deductible plan with, let's just say the employer seeds 500 for singles and a thousand for employees on a $2,000 deductible plan, or 4,000 for families, right? Something simple, if a third to half of that population ends up with a substantial balance that they can roll over for future medical expenses. Is that a bad thing?
[00:26:18] Christian Moreno: Oh, and by the way, when you're applying trend, if you're trending up that medical plan, the HSA dollars don't trend. So you're only trending on 80 cents on the dollar, give or take. So they're naturally suppressing certain trend lines. Now, that's a little disingenuous 'cause you're shifting the inflation back to the employee through the HSA dollars.
[00:26:40] Christian Moreno: But structurally, I'm not convinced these are broken. They are 100% flexible. If you want a 100% plan, you can contribute more and make it. But I think the frustration is that middle third, right, of people just feeling like, man, this plan doesn't cover anything. So those of us, and I was one of these that sold these as consumer-driven, that might not have been the right moniker.
[00:27:05] Christian Moreno: It was designed so that those who didn't claim could use those dollars later and really sits more with any other insurance arrangement in your life, right? If we think about, I don't insure very predictable, very low cost things, right? Do I really need insurance for $130 office visit or can I run it through my HSA or conversely, would I rather have a high deductible plan that covers me and my population for the $30,000 claim incident.
[00:27:33] Christian Moreno: So I'm more wondering where they misunderstood about what they might do or they mis-sold. But there were also those, for that matter, that used them as investment vehicles and said, these are great retirement. You know, they were sold as a lot of things that they didn't deliver on.
[00:27:49] Kirk McConnell: Well, so if we define the new challenge then as how do we use plan and design to drive or encourage folks to use higher quality providers, what do you think the keys in that will be?
[00:28:02] Christian Moreno: First it's gonna be the network. I mean, if physician A is 10% less expensive than physician B and is higher in quality, well then the question is how do I give that information to the member so we can talk about other models that are available today that actually steer the member in real time.
[00:28:22] Christian Moreno: But I do think the member is going to have the resource. I mean, we all have miniature computers in our hand. I'm geo-located for my Starbucks app. Are we honestly saying I can't pull up my app and decide of the three physicians that were recommended to me that one of these isn't the best? This is why I think the PPO is so fundamentally flawed as it stands today.
[00:28:47] Christian Moreno: If I were to put a X and Y axis together on cost and quality, certain physicians and certain specialists would go into one quadrant. The other on the bottom quadrant, right? And then there would be those that were both high in cost and low in quality. We can throw those out, right? They finished last in the medical class, but they're still called doctor or whatever.
[00:29:06] Christian Moreno: I don't know that you can make this just an employee decision. At the end of the day, it's going to have to happen further upstream if we wanna have a seismic or substantial impact on cost. If we're just talking about physician A versus physician B, but I can still choose to go within any hospital system at any time with total freedom.
[00:29:28] Christian Moreno: And again, I'm not a proponent of removing choice. I'm simply addressing your question around the substantial cost increases, overlaid on that large of a broad network. Something's gotta give. But if we are gonna leave it up to employees and just make it a broad PPO network, I don't know that they have the information just yet to make those decisions.
[00:29:50] Christian Moreno: It's gonna have to come from intelligent data tools in their hand. It's gonna have to have assistance from the TPA, and it's gonna have to have assistance from the ecosystem around the member making those decisions.
[00:30:04] Kirk McConnell: You've used a couple loaded terms: draconian, breaking point. Especially as we enter open enrollment season, I think a lot of benefits teams are scared of an employee saying, Hey, why is my provider no longer in network?
[00:30:19] Kirk McConnell: And I think historically a lot of the plan design questions have been about how do we prevent that from happening. Do you think we're getting to a place where employers need to embrace that impact and change is going to have some disruption.
[00:30:33] Christian Moreno: I think it's gonna be driven by the large employers first. That hasn't happened yet. Right? And you could probably name them as well as I can, but large north of a hundred, 200,000 employees would have to make substantial changes and that would then trickle down. I do think the current economic framework in which we're working and the employment trends probably don't lend itself to that just yet.
[00:31:03] Christian Moreno: Kirk, if I'm being honest, I think the employee doesn't necessarily have the freedom of employment going anywhere, at any job at any time right now. But when the pendulum swings, I think the employer will lead the charge. Let me put it to you that way. I think they will make the determination that the 10 to 15% savings in any given metropolitan area is worth choosing the narrow network on behalf of and take the negative feedback.
[00:31:31] Christian Moreno: But we are not there right now. It just hasn't happened. Certainly not en masse. Well, we have the odd example. I think employers and for good reason, you know, it's not all talent by the way. It's the talent they can't or don't wanna replace. It would be disruptive on a level that I think they are unwilling to face at the moment.
[00:31:52] Christian Moreno: Lemme put it that way. I think employers, they are sensitive to the disruption of that benefit in particular for sure.
[00:32:00] Kirk McConnell: As we go into strategy season, we're gonna have employers who their CFO gives a mandate, Hey, you need to hit this trend target next year. I'm gonna give you a bit of a false choice here.
[00:32:11] Kirk McConnell: I'm gonna make you choose. As you enter those conversations, do you feel like the employers don't have levers to pull to hit those cost targets, or do you feel like the levers are there and employers have just struggled or been reluctant to pull them?
[00:32:29] Christian Moreno: I think that employers have and pull levers regularly. And those levers are in consideration of the relative disruption to the member. There are a couple of levers, and these levers would be, you know, you pull one of them and you turn all the lights out by accident. I think this is one of the reasons we have not, I mean, combined with the costs seen wide adoption of anti-obesity medication coverage, right?
[00:32:58] Christian Moreno: They just simply can't take it on right now. And even if they could, the level of uncertainty around the cost, but the lever you and I are speaking about more broadly right now, which is the disruption to the large, comfortable, warm water PPO network where I can choose with almost complete freedom is so ingrained in the base offering.
[00:33:22] Christian Moreno: I'm afraid I'm seeing more swings to it. That is such a valued benefit. I'd far rather increase the out of pocket increase the contributions, maybe create a reverse tenure based contribution schedule or income tiering, all these ways to skin it in a way that allows it to be more palpable financially.
[00:33:46] Christian Moreno: But I don't think that the levers you and I are referencing are anyone's got their hand on them right now. By the way, for what it's worth, I've been saying this, I think we, but I've been saying it at certain conversations and some of them with CFOs and HR executives alike for many, many years. And I've been wrong almost every year because I used to say, this is the year, this is the year it's gonna happen.
[00:34:09] Christian Moreno: And it hasn't. I don't know when the line is, but I don't think it's right now.
[00:34:14] Kirk McConnell: So if I were to give you a chance to challenge some of the employers out there who say broad access feels like a necessity, how would you challenge them to say, Hey, maybe this is an assumption you should question?
[00:34:30] Christian Moreno: I think broad access with navigation slash steering of the member is where we're probably gonna have to go right inside of the broad PPO. We're gonna have to divide the network regionally by high performance. Reasonably low cost, either in total cost or unit cost. And we're gonna have to work, steer the members there through the assistance of either the TPA, the BUCAs or some outside entity that works to do so.
[00:34:55] Christian Moreno: And usually nobody answers their phone from, you know, fill in the blank insurance carrier. But I think that steering is gonna have to happen outside of the confines of the discussion of whether the PPO stays or go. I think there are several vendors that we work closely with that do just that and do it well, and I think that is probably the near term solution for employers, which is to consider an overlay or using a TPA relationship to begin to steer those members towards those providers.
[00:35:32] Kirk McConnell: Well, Christian, as you said, who knows what changes the next year will bring, but there is no doubt this will be an interesting strategy planning year as we enter 2026. I wanna thank you for your time today. If people wanted to continue the conversation with you, how can they reach out to you?
[00:35:52] Christian Moreno: Well, I have a standard joke given that I've been doing this for a while. They can go to my MySpace page. I'm just kidding. I don't have a MySpace page. They can find me on LinkedIn: Christian Moreno, Lockton. Or they can shoot me an email at cmoreno@lockton.com.
[00:36:06] Kirk McConnell: Excellent. Well, Christian, thank you so much for your time and your wisdom and pushing us all to think a little bit differently.
[00:36:13] Christian Moreno: Thanks for having me, Kirk.
[00:36:15] Kirk McConnell: If you're enjoying The Benefits Playbook, we'd love your support. Take a moment to rate and review the show wherever you listen. It really helps others discover us and join the conversation. And while you're there, don't forget to hit Subscribe, so you never miss an episode. If you know a colleague or friend who'd enjoyed the conversation, share it with them too.
[00:36:33] Kirk McConnell: Thanks so much for listening, and we'll see you next time.
[00:36:36] Producer: This podcast is brought to you by Collective Health, a health benefit solution that guides employees toward healthier lives and companies toward healthier bottom lines. Check us out at collectivehealth.com.