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Betting on Consumer Choice in Healthcare | Former UnitedHealthcare CEO Gary Daniels
36 Plays13 days ago
We're sitting down with Gary Daniels, the former CEO of UnitedHealthcare and now Chief Growth Officer at Thatch, a consumer-centric health benefits startup reshaping how employers fund coverage through ICHRAs and modern infrastructure.
In this episode, Gary breaks down the hidden mechanics of the U.S. insurance system: why employer-sponsored coverage often fails the individual and how different lines of business create massive structural complexity. He walks through the industry’s biggest shifts over the past decade, from the rise of self-funding to ACA dynamics, reimbursement cuts, and the role of vertical integration. We discuss why the real failure point in healthcare is transactional infrastructure, not just policy design, and why ICHRAs unlock consumer choice for the first time. Finally, Gary explains why he left a top role at United to join a startup, and why he believes the future of insurance will be built on transparency, choice, and AI-powered operations.
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Transcript
Introduction and Guest Background
00:00:00
Speaker
Welcome to the Healthcare Theory Podcast. I'm your host, Nikhil Reddy, and every week we interview the entrepreneurs and thought leaders behind the future of healthcare care to see what's gone wrong with our system and how we can fix it.
00:00:15
Speaker
Today's guest is Gary Daniels, the former CEO of UnitedHealthcare and one of the few leaders who see in every layer of the US insurance system from Medicare, Medicaid to ESI from the inside out.
Building a New Healthcare Infrastructure
00:00:27
Speaker
Today he breaks down the hidden mechanics behind employer sponsored insurance, why averages tend to fail individual consumers, and why he believes the future of health benefits lies in consumer choice through ICHRAs.
00:00:37
Speaker
Now at thatch, he's building an entire newly new infrastructure for how Americans buy and use healthcare care coverage, providing choice back to the consumer. So thank you, Gary, for coming on today. Really appreciate your time. And i mean, you started at United as an account manager, eventually became CEO of the entire Pacific Northwest division.
00:00:55
Speaker
I would love to hear happened. helped you graduate from those different responsibilities or the care pivots in your career? And what was the difference between managing an account to, of course, managing dozens of business units at one of the world's largest health insurers?
00:01:10
Speaker
Yeah, so first of all, thanks for having me this morning. um yeah It was a pretty interesting journey on a variety of levels. Even prior to United, I worked for Regis Blue Cross Blue Shield, which was a local blues plan for a little over five years. and And one of the things that i recognize working at the local blue plan is that if I wanted to you know truly understand the health care space, and i always had the goal of being a health plan leader, um i just i I got to listen to really passionate, really smart people at Blue Cross, Dr. Bart McMullen, who is one of our CEOs.
00:01:43
Speaker
um I just really paid attention to kind of the tempo of healthcare leadership and what I thought it would take for us to eventually crack the system. I didn't think it would take this long. Yeah.
00:01:53
Speaker
And so I knew I wanted to leave my own plan eventually. and And some of the foresight that I had was that for me to be able to do that, um I really need to understand you know the difference between a local health plan, a local blue versus a national competitor. And being even being even more differentiated, going to for-profit competitor um would give me ah ah probably a pretty incredible insight.
00:02:16
Speaker
um Never in my wildest imagination did I think that United would turn into what it turned into. yeah yeah terms of like When I joined, Optum didn't exist. And now Optum is the biggest part of United Health Group's business. And so um when I joined, I joined with the idea that I wanted to move into leadership.
00:02:34
Speaker
um I was willing to flex and move out of sales and try some different things.
Understanding Healthcare Complexities
00:02:40
Speaker
um But a couple of things I learned early on that I think there were absolutely critical for my ascension was ah number one, how important it was to understand your cost profile. So understanding your provider contracts, um the cost side of the house,
00:02:56
Speaker
um All salespeople like to sell and grow and pay attention to the revenue side. But the other half the house controlling your costs, understanding the balance between a carrier and provider relationship. um Because it's it's very nuanced, understanding the influence of...
00:03:11
Speaker
you know, what happens between Medicare, Medicaid, commercial, and then individual once the ACA went into account, I really became a student of how all of those pieces
Industry Shifts and Changes
00:03:23
Speaker
work together. And it really allowed me to differentiate my path. And that's ultimately why I got shots to to move up much quicker in organization and probably some of my peers.
00:03:34
Speaker
right because it's definitely difficult, I can imagine, because there's so many different moving pieces in health insurance. And to get a full picture is a lot more than just like taking a step back. You have to like piece these different granular details together.
00:03:44
Speaker
and I mean, there were a lot of major a policy shifts during your time. i mean, the ACA was just starting, a lot of new tech advances, and consumer expectations, and I guess, consumer views of insurance have changed a lot over the past 10 years.
00:03:57
Speaker
From your vantage point, like, what were some of the biggest industry shifts that you witnessed yourself? And how did you United adapt to those changes? Because from what i understand, like, it's, of course, you as the incumbent, one of the biggest players, it's your kind of responsibility to almost move the entire industry forward. So must have been a tall task, but what were some of the trends and things that stood out to you? And how did you guys react to it?
00:04:20
Speaker
Yeah, there's a lot in there. So, you know, I tell you, like you know, first of all, um, you know kind of going back to when I started off at Blue Cross, everything was fully insured. Even these large jumbo, you think about like the Googles of the world today, like those large national account customers, the majority of them were still fully insured. Large state purchasers were still fully insured in one of the reasons why i wanted to jump to UHC early on is because this, there was this evolving like self-funded business model. Right. And, and ah part of the reason why i gravitated to that one is because you get to work with these really large customers. And number two is, as I was understanding, like,
00:04:57
Speaker
how the cost profile works on the contracting side. I took a really unique stance as a sales rep to translate that for our self-funded customers, our CFOs, um these really sophisticated purchasers of healthcare. And so I kind of got to be at the foundation of this explosion around self-funded growth. And self-funded business was really similar to the way that we managed our fully insured business on the carrier side. And so being able to kind of hurdle um That experience um as an up-and-coming salesperson and then a young leader within our health plan um really allowed me to, i think, understand the depths and some of the challenges within healthcare fairly early on.
00:05:39
Speaker
And then obviously we continued to evolve as an industry. Optum came along, you know, this whole birth of like, what is Optum? And it really started off around, you know, health and wellness. And there was all these acquisitions around these different PBMs. Optum eventually became OptumRx.
00:05:55
Speaker
And I could kind of see the maturation towards like, You know, everyone talks about vertical integration is kind of a ah big bad word and it can be if it's done incorrectly.
Consumer-Centric Insurance Models
00:06:06
Speaker
But there was a really interesting business proposition around like if you could truly like organize around capitation and care delivery and aligned incentives, meaning that the the payment to the provider is fully aligned with the patient outcome, that becomes an incredible unlock and an incredible value prop.
00:06:26
Speaker
And I think that you know prior to the pandemic, there was so much movement into that space and that the pandemic happened and we realized like, oh, no, we have like a payment problem within the health care space.
00:06:38
Speaker
um The one thing that actually did work well during, you know unfortunately, the pandemic is when we had capitated providers, they were still getting paid like they weren't seeing patients, but they were still getting paid because that was the way that the model was set up. So being able to watch all those iterations of healthcare and then ultimately take those learnings and have some incredible tutelage within the world of UHC, some incredibly smart people allowed me to kind of take the next iteration of where I'm at today.
00:07:06
Speaker
So. Yeah, and I think it's like, obviously, it's, I mean, that's actually a really interesting point about how, like, during COVID, you'd have to, like, deal with the way capital payments work as opposed to like, reference-based pricing, which I know is, like, more, like, the the precedent to that. But, I mean, I know recently in a blog post, you wrote about how, I mean, of course, as you spoke on, you helped build this, like, current model, but you believe that, like,
00:07:27
Speaker
There's some core maybe issues with the current model. Of course, like it's entrenched in the way we do insurance. We're really different from other countries um in the way that we have like almost a pathwork of different insurance systems rather than a whole holistic one, maybe like that the UK or Germany does.
00:07:43
Speaker
And we'd love to kind of hear his perspective. what are some like structural weaknesses that you've seen in the traditional health insurance model that made you maybe believe that we need a more consumer-centric approach? Yeah, it's a really complex question and I won't do it justice answering. I'll just give like my perspective and opinion. um You know, when you think about the complexities of um the individual business, which is somebody that's just, you know, they may or may not work for an employer. They go out and purchase their own health insurance.
00:08:12
Speaker
um you know, in terms of like the way they think about their health care needs versus a patient that's on Medicaid. Right. I think there's a lot of noise right now about like these Medicaid cuts and and what it means for Medicaid membership, what it means for state budgets, really complex in terms of like how states get money of the federal government and redeploy that.
00:08:31
Speaker
Um, so a lot of nuance, really complex. And then you throw in Medicare, And if you look at like why, for me, it's interesting to watch all the pundits talk about like, oh, United's falling off. Their stock price has been cut in half. Centene's been cut in a half. What people really don't understand around all of those levers is there is what was referred to as V28 that was passed in 2024, which was one of the largest reductions in Medicare reimbursement rates.
00:08:58
Speaker
And so you have this large reduction in Medicare reimbursement rates. Now we have reductions in Medicaid reimbursement rates. Now we have reductions and pullback from individual subsidies. Nothing's really going to happen with these insurance carriers. It's just going to be kind of a rebalancing, I think, in the short term and and obviously kind of a repositioning in the long term. but you know, all of that nuance um just means that it's uber complex. And then we didn't even talk about like the group market where I worked for, you know, 15 years, which is, you know, the market's becoming incredibly bifurcated. So what I mean by that is,
00:09:32
Speaker
Everything used to be just fully insured and self-funded. Now we have fully insured. um a lot of small businesses moved to level funded, which is like, it's kind of like an in-between. It's an in-between, right? It yeah feels, smells like fully insured, but it's self-funded to get out of all of the state regulatory rules. They don't have to meet network adequacy rules.
00:09:55
Speaker
A lot of employers moved into that space because they got to figure out how to cut costs at end of the day. And then we have these jumbo self-funded employers that thought that bifurcate the market even more because they don't want to pay for care management fees and they don't want capitated models. They want broad PPOs.
00:10:12
Speaker
And so I lay out all of that like infrastructure challenge between individual Medicaid, Medicare, and commercial because it's not just that the system is broken. It's that the individual parts of the system um aren't...
00:10:27
Speaker
just broken they're incredibly complex and how we pull those together is um is is incredibly challenging despite like like i think united probably has like the best chance kind of based on their understanding of how all the pieces work together but even on it from a national model perspective um they can't make it work so it's it's very challenging Yeah, no, definitely. And I think like, and I actually would like to hear a perspective before we get into like the complexity of like fully insured versus level um level so levelf funded plans and self-funded plans. Before we get into like kind of that and where Acre is coming to play, I wanted to speak on a bit on United a little bit more.
00:11:05
Speaker
um I mean, within United, of course, like you spoke on how like it's one of the few players that are really touching every single part of insurance and the different stakeholders on PBM it's to like Optum, of course. But we'll have to hear about your perspective, like during your time there, as you kind of scaled up in United and you took leadership of the Pacific Northwest Division, how did you kind of almost like see how United was differentiated from its competitors. like What were the kind of core like tendencies or services or things that you guys had that maybe set you apart from like other companies like Aetna or Centene and the ah the rest of them?
00:11:39
Speaker
Yeah, it was unique in that they were um they touched every line of business, right? Like you might see a Centene, it's heavy within the Medicaid. um You see Cigna, which is heavy kind of in the commercial space, but not so much in like Medicare.
00:11:54
Speaker
um The blues, depending on how the blues are kind of broke up between the nonprofit blues and the for-profit blues. um It really was a unique company in a sense there and just about everything. and yeah And underlying all of that, they're also in all of the transactions. When you think about like their transaction business, you think about what Optum does and being, i think they're like the number one lata They're the largest primary care multi-specialty practice as well.
00:12:20
Speaker
um So incredibly complex. And what I tell everybody, regardless of like what you think about the business model um or that how much money people make within industry, if you took United out, there would be somebody else that would be making that money at the end of the day but the one thing that i think was my biggest takeaway and what you see when people are within united and they leave and go do like what i did which is working for a fantastic company at thatch we're doing some amazing stuff is if you can truly like learn and take the time to like understand how all the pieces are fitting together the nuances the strengths and weaknesses and understand like the planning process because i tell everyone like
00:13:02
Speaker
Right now, for we sit in, what is this, August 2025. These big health insurers are building their products and will make their products and go-to-market strategy decisions by January 1 of this year that will take them all the way through 2027 to 2028 because of how far in advance we have to file the products.
00:13:22
Speaker
We have to think about the rates. We have to think about yeah the financials, you name it. And so it's an incredibly complex business. But if you just simplify it in terms like understanding the go-to-market strategy, the tempo for business planning, how the different lines of business works together, um and and just really be more of a suit in the game, you can do amazing things within the world of United, Elevance, you name it. Even local blues plans, I have some incredibly...
00:13:50
Speaker
passionate and creative counterparts within some local blues plans that do some amazing work. And so anyone can learn that stuff and then go build cool companies that solve the real problem when they decide to do that.
Thatch's Focus on Consumer Choice
00:14:03
Speaker
And how did you go about learning that basically? Could you get a little detailed? Like I think, I imagine must have been a tall task, require like some like iteration on how you go about learning, but what kind of, so what did you do specifically to set yourself apart when you were learning about how um these different business and unit lines kind of kind congregate together?
00:14:22
Speaker
Yeah, it's an incredible mentors. I had a lot of people that I, I shared a passion for not just being a sales guy or just a part of the machine. I shared a passion for willing to spend a lot of additional hours and personal time and understanding.
00:14:38
Speaker
you know how Medicare works, how they build their products, how they contract their products. I would sit in meetings and just listen and be a fly on the wall. And um and not last, I think sometimes people like wanna do that and they get in there and ask a bunch of questions.
00:14:52
Speaker
And it kind of like, that's not the point of you just sitting and listening. And so I think that um I got a lot of really smart coaching that says, hey, we're gonna let you be a part of this process. You're gonna be in rooms that you probably shouldn't be in.
00:15:06
Speaker
But just understand, like if you listen and ask the right questions, probably post-meeting and um continue to figure out how all the pieces work together, you really can build your own unique path, even like in a Fortune 5 or whatever company it was as as I came up through the organization. Yeah.
00:15:24
Speaker
Yeah. and And after, like, of course, as you came up with the organization. Now, you recently, over the past few months, as you kind of hinted towards, you made a huge leap by joining Thatch. And Thatch is a really interesting company. Of course, they're a startup focused on providing a new model of health benefits and just how they work in general.
00:15:40
Speaker
And I would love to hear, like, what motivated you to make that change? Was it more personal? Was it more like a belief in Icarus being the future? Like, was there... What kind of motivated you to like leave a traditional carrier that i assume you're doing really well and to pursue a more consumer-centric model with that?
00:15:56
Speaker
Yeah. So there's a lot that went into it. I think first for me, um, what's also defined my career outside of being a student is always willing to make bets on where I think the industry is going to go.
00:16:07
Speaker
Um, you know, ah in terms of like the way we need to build our products, the way that we need to work with our distribution partners, that was part of the, I would say that the, the, the DNA that was woven into my willingness to learn and then make bets. And those bets came to fruition for better words. Sometimes they didn't. But yeah, feel good portion or else I would have been promoted.
00:16:27
Speaker
um But a part of that process, I also started working with startups. I started um I built a really good relationship with the Tech Association of Oregon with Tech Nationally.
00:16:38
Speaker
And I just fell in love with how hard these young health care entrepreneurs were working to solve this problem because everyone looks at health care. And they're like, oh, my God, it is such a broken business. Yeah. Why can't we fix it? Right. And um and I just fell in love with the passion, excitement and, you know, some credible ingenuity that came out of some of these startups. And so I started working with them, coaching, advising.
00:17:02
Speaker
um And then back to like my commentary about like if you understand the planning at United and the tempo of their business, you can kind of see the direction of where the industry is going. And a part of that is employers are really frustrated trying to offer employee benefits to employees because you know i think the one thing we all know is that consumers are Anything but alike. Right. So you have these larger employers that offer one or two carriers, maybe one or two benefit types, deductibles, coinsurance, copay to 500, 1000, even just 25 employees.
00:17:36
Speaker
You can't you can't tailor a benefit to their need when you're just buying in bulk. The thing we know about averages is it absolutely fails the individual health care consumer.
00:17:46
Speaker
um And furthermore, you could see the strength within the ACA. And so even though there's this noise for 2026, from a historical perspective and post 26, I think we're going to see the ACA pools continue to solidify and grow dramatically.
00:18:03
Speaker
um And so kind of piecing those two pieces together, I started looking at businesses that were really focused on unleashing the US consumer. allowing for benefits to flex around, you know, kind of individual purchasing needs when families are sitting around the dinner table, like what do they truly want and need um from both their employer around financing their health insurance as well as like what they need from a family perspective. Are they building families? Are they getting closer to retirement? Are they switching jobs and going to another state? You know, like all of that individual stuff that is really about your own health and your family.
00:18:40
Speaker
And that really is what took me into the ICRA world. Like I knew about ICRA. I knew it was growing. um And I started paying a lot more attention to it towards the end of 23. And to be really honest, I told everyone I did a secret shopper. So I started, you know, everyone wants to talk to UHC. And so I use that leverage to basically interview a lot of the different ICRA companies you know,
00:19:03
Speaker
um And a part of what I was doing wasn't so much about like the platform and all that stuff. It was, it was healthcare. And I can't stress this enough that the biggest break in healthcare is the transactional stuff.
00:19:17
Speaker
It's the transactions between the providers and the insurers. It's the transactions between. and And those transactions happen to be a claims, right? It's the transactions between taking money from an employer's payroll and paying for insurance on behalf employees. it's It's like all the fundamental stuff that breaks where a consumer walks in to a doctor's office and they're like, here's my ID card and say, you actually don't have health insurance because something within that flow broke.
00:19:46
Speaker
It's all a transactional issue. And so as I was talking to all these different ICHRA companies, that was my tempo. was like, well, you built a platform. i think a lot of companies can build platforms. What are you doing to solve the transactional problem? and um And no one was, as I was talking with all these different and really good companies, there's a lot of really good ICHRA companies, I think, and they're very innovative.
00:20:12
Speaker
Um, but none of them were really focused on that particular issue. and And I met, I got introduced to Adam, who was of the co-founders at thatch and came from Stripe. Uh, I was like, oh wow, this whole like FinTech approach. And I meet the other co-founder and Chris and not only that, they were like, I, this is I joke, i was like, I fell in love with these two guys. Like it's not often you find founders that are like super passionate, super aggressive, amazing human beings. Chris is a former cancer researcher at MIT.
00:20:43
Speaker
and And what they'd figured out early on was let's not just build a platform hire a bunch of salespeople and go sell ICHRA the way that everyone else was.
00:20:56
Speaker
Let's get into a room and figure out, hire data scientists, hire these FinTech engineers, hire you know the people that can solve a national, really complex infrastructure problem. And so when I got engaged with them, they weren't even focused on sales. They had you know 800, 900 employers on the platform that found them almost on a direct basis.
00:21:17
Speaker
And they weren't focused on the go-to-market really at all. It was all on you know how we use data science, how we use itt fintech, you know how we build an end-to-end solution um that can solve this ICHRA challenge. And yeah, I jumped in both feet as soon as I i found these guys.
00:21:36
Speaker
Yeah, and I think on the first point, like i think ICHRA is definitely there's a couple obviously key motivators to why I think they'll and agree with you in terms of why I think they'll be super important. First of all, like there is that you can't build a health plan, around like you said, on an average, like there is even like the average American is probably like 100, like fifty some X amount of pounds. Like they have these health conditions. Like if you build a plan for them, that's probably not going to work for everybody.
00:21:59
Speaker
And then, of course, like I just said, risk of risk is pooling within Medicaid. The exchanges are doing well. And ah there are some problems with what's going on now with the new like cuts. But I think overall, like ICHRAs, which allow you to, for the audience, allow you to basically select your own insurance and have freedom to go to the ACA exchanges and pick insurance that works best for you. There's definitely a lot of tailwinds behind that. But I want to go into a little bit about Dash. I think, I imagine from your perspective, a lot of these companies were doing seemed very similar in terms of like, yeah, as you mentioned, getting ICHRAs, selling, going to market.
00:22:30
Speaker
But what was like the philosophy around why Thatch focused on a data science oriented and the infrastructure point first? like Why do you think they went about that and what advantage did that provide them as opposed to the others that took this ICHRA model, went straight to market and tried to sell and maybe get like a critical mass of users or customers?
00:22:47
Speaker
what What made their philosophy so exciting and important to you? Yeah, it's the focus on the consumer, right? If you if you're trying to trying to truly solve for a consumer that's sitting around the dinner table to make a purchasing decision with their family, when they've, and I got to just highlight this, where they've never had to do it before, right? that Historically, that purchase of health insurance has been done by the employer and then the employee gets like, here's what I got. Like, no matter what I want to do, yeah it's what I got, right? There's no decision in that. And so if you think about that family that's sitting around the dinner table, that's never had to actually like think about like what do I want for my insurance, what company do I want to work with? um
00:23:27
Speaker
ah you know ah Is my doctor in network? Are my drugs covered across not just one health insurance company, but could be 10 health insurance companies? That's all really complex stuff.
00:23:39
Speaker
And so if you build things from an infrastructure perspective and you can provide that clarity to a consumer when they're making that purchasing decision, not only have you made it like easy for them, you've reinforced the, I would say, their ability to understand like they're in control of their own to destiny around their healthcare. care right They can work with the insurance company they want. If they have a bad experience, they can move the next year If they have additional qualified medical dollars because of the contribution their employer gave to them, they can go spend that money on, you know, mental behavioral health. They can use the thatch marketplace where we have like everything from access to Peloton bikes, to infertility services, to you name it. And they truly control what they want out of healthcare at the end of the day. But you have to get the technology right. um You have to get it right for the employer to trust that you will take care of their employee because they still want it to be perceived as a value.
00:24:38
Speaker
um And it all has to translate from how we quote to the onboarding experience to like all the trackers that we've built, which are really cool and really complex to let an employee know that, hey, we've sent your application to Blue Cross.
00:24:52
Speaker
Hey, we've submitted your premium to Blue Cross. Hey, they received both of those. Hey, you're going to get your ID card on X date. And we're going to tell you that via text message. That is, and we do it on a national scale with every single individual health insurance company, super complex.
Engaging Employers with ICHRA
00:25:08
Speaker
And so if you want to do it right, it starts with infrastructure. And that was, that's what we do at that. We are an infrastructure first company that brings to life the ability for ICHRA to really work the way it should work.
00:25:21
Speaker
And I want to get a little bit deeper into the infrastructure because I know, for example, there's a study ah quite a few years ago around like when people are picking their health plan with and even just what their employer provides to them, which is not that many options, they often like don't exactly know what to pick and they make the wrong choice. For example, like maybe Like they pick a plan with um like high premiums and low deductibles, or like they they they don't really know like how to interpret deductible. It's good if premiums are good or bad and what the plans will actually look like. Basically, we're bad consumers of our own healthcare in some ways in shape and shapes and form. But how does like that go about like providing like choice architecture and help patients like pick the best choice for them? like what does that infrastructure actually look like? Because of course, if you gave someone the entire ACA exchange, they probably wouldn't make the best decision. But i imagine that is a good job like guiding people through this and picking the right option for their family.
00:26:12
Speaker
Yeah. You know, it all starts with like the quote mechanics, right? Cause we have to work with employers first. us We have to get employers comfortable. One, what they've done this group model forever and now they have to give up total control and they need to be an incredible value. Like health insurance is a retainment tool at the end of the day. And so, um it's it's really important that we get it right. So when we actually quote that, we're the only ones that do this. But when you dump in your census, you can see in real time where every one of your employees are across the country.
00:26:42
Speaker
um You can see every single individual plan design that's available to that employee by zip code. And in real time, you can see the cost for that individual plan. And so um what it allows us to do is to have a very effective discussion with the employer around like the contributions that they set. Are they making affordable contributions, both from like a a reality perspective as well as like a law perspective because they have to make contributions that are affordable. um And then being very clear around like, are there markets where we have gaps in plan designs for whatever reason, it could be on on ah on exchange versus off exchange.
00:27:18
Speaker
um And then as the employer says, yes, this looks great. It's critical that we create the same exact experience for the employees. So when an employee does onboarding at that, they log on. The very first thing they do is type in who their doctors are because that's that's priority number one.
00:27:35
Speaker
yeah And then what we do is we sort all the plan designs by is their doctor in network. So we can do it by cost. We can do it by is their doctor in network. So they don't have to go and search is...
00:27:46
Speaker
you know, is my doctor in the Ambetter network versus the Blue Cross network versus Unite? We automatically do that for them through this particular process. And then again, it's the communication through open enrollment, which is uber critical. We're the only ones that have figured this out. And I, i joked cause I'm now the old guy. I'm in the mid forties. I'm like the old guy at the startup. Yeah. Domino's pizza tracker.
00:28:09
Speaker
Cause we were talking about like, we got to build this tracker. And I was like, well, guys, Um, and this has come up multiple times. You know, one of the bigger things that Domino's did was the pizza tracker. And, you know, from a business perspective, their business was kind of in the toilet. They launched this tracker and everyone thought it was goofy, but guess what? and Everyone started buying Domino's in parts because they could visualize and see what was happening. There was a comfort level there.
00:28:30
Speaker
um And so we literally built a tracker within Thatch. We also built a tracker that's a mobile application um that communicates with our consumers in real time so that they feel like, okay, i've gone through this process. I've selected my product.
00:28:45
Speaker
I've done everything that I have to do to get my health insurance. And now what? Oh, now what is we submitted your premium? We submitted your application. This is when you're in your ID cards. um And it becomes an end-to-end solution that is very transparent.
00:29:00
Speaker
I really love what you guys have done with that. project Actually sounds really interesting. And also probably for me or anyone who'd be a potential user, it seems like much less of a headache than the other approach. If you just took this to market immediately, I imagine that the consumer themselves would have to map different providers and see exactly what works best for them, which is unimaginably difficult.
00:29:19
Speaker
um And I would love to hear, I mean, now that we have this like great, you guys have a great product going like for the go to market, like what have the conversations been like with employers? Because I know like there's different, basically like almost like a scale, like, of course, some will have fully self funded plans. And then of course, others will want like fully funded plans. And IGROS can probably tackle along that spectrum, but probably around like level funded and self-funded plans primarily. Like, what do the conversations look like when you speak to them?
00:29:44
Speaker
Explain them what ICHRAs are and what is their reaction? Because, of course, some of them, they don't want to take too much risk and deal it be overburdened with fees. But that doesn't necessarily do that. So we'd love to kind of hear what do those conversations look like.
Future of ICHRA and ACA Exchanges
00:29:57
Speaker
Yeah, so it's it's kind of a I would say it's kind of a multiple layer discussion. And what I mean by that is, you know, I'm a, I'm a massive believer now, now that I'm in it, that the only thing that will change the future of healthcare is around employee choice. Like the U S consumer is the most powerful purchasing thing on the entire planet.
00:30:15
Speaker
And it's been locked up in this employer based model where they can't make decisions. Right. So the sooner we unlock that, the better. And. And furthermore, you know from an employee perspective, again, being a retainment tool, for them to make their own decisions around like, I work with Kaiser, I love Kaiser, I love the brand, but this employer is with Blue Cross.
00:30:35
Speaker
Like, cool. You can fund them the right contribution to where they can go back to Kaiser said employee choice at the individual level becomes... really important. The other thing it does is for the CFOs, the the organizations that worry about cost, you no longer worry about your renewal as an employer every single year. doesn't matter if you're fully insured, level funded, or if you're self-funded because you determine the contributions that you make on behalf of your employees.
00:31:05
Speaker
and End of story. So from a long term budgeting perspective, you can say I'm budgeting my health care cost at 10 percent increase year over year. And that's the contribution that I make on behalf of my employees, you know, based on them going and buying their own individual health insurance.
00:31:21
Speaker
We also have employers now that are like that are really starting to understand, especially a couple self-funded employers. Yeah. that you know we have this crazy thing called the thatch marketplace and so the way icra works is say an employer gives you a thousand bucks and you go out and buy a plan that only costs you 500 that means you get to keep 500 every single month that goes into a qualified medical bucket that you can spend on whatever you want around health care it could be massage therapy mental behavioral health if you're doing family planning it could be one of our um
00:31:54
Speaker
ah vendors for infertility. We have the thatch marketplace. I think we got like 25 different vendors that are fully integrated with us. um But what that really gives you as an employer, a lot of stickiness, right? Because now employers are like, well, wait a minute, I get my additional 500 bucks or 200 bucks to spend on my own healthcare journey. And even though I didn't,
00:32:13
Speaker
have a massage therapy benefit. I can now go get massages when I want to, when it's covered. yeah So it really starts to create a much different structure fundamentally for the employer-employee relationship and in the backdrop of cost control for an employer. Like I tell, I was with a bunch of startups in New York and i was telling you know all of these like startup companies, like the best thing you can do is get into an ICRA early, right? Because then you control your healthcare spend for the entirety of your business, no matter like how you grow, you do not grow into a problem. You don't have to grow into fully insured, then level funded, then self funded. You're just locked in to this model.
00:32:53
Speaker
And at the of the day, it's the best way for you to control the experience and your costs in a way that has never been allowed in healthcare. Yeah, and I think that's definitely really interesting because right now what the transition, it seems like each at different milestones when you graduate different employee sizes, you're constantly forced to switch, make new decisions.
00:33:10
Speaker
And each time when you do so, you're pushing the pre-existing plan to kind of the limit, which makes it a bit difficult. um and and I would love to hear. i mean One unique thing about ICHRA is that when you're buying insurance, you're not necessarily picking from what your employer provides. You're going to the ACA exchanges and you have plenty of options there, but it's a bit of more it's a bit of a different decision than that.
00:33:30
Speaker
We'd love to kind of hear. i mean Now the ACA is of course, like there's a lot of like companies are not doing as well because it's a big, beautiful bill like and really kind of made it difficult for funding for Medicaid and Medicare. But of course, there's still a very solid pool of risk within the industry. So we'll have to kind of hear what do you what's your view on like the ACA exchanges and how they'll kind of tie into ICHRAs?
00:33:52
Speaker
Because it seems like, of course, you're pretty bullish
Excitement for the Future of Healthcare
00:33:54
Speaker
and excited about it, but we'd love to kind of hear what makes you so um entrenched in that belief that it'll continue to succeed. Yeah. So, you know, first of all, we all have to understand that um two things. One is that the carriers have the biggest decline in their earnings and probably history over the last six months. yeah Part of it, again, because of cuts in Medicare, BAV28, cuts in Medicaid, um now with the subsidy expiration that's hitting the ACA,
00:34:22
Speaker
And the one thing that carriers do not want to do is lose money in their non-core business, which individual for most carriers is non-core business. And so what you see right now is a massive overpricing for 1-1-26.
00:34:37
Speaker
um And so what happens because of the medical loss ratio thresholds and rebating and everything else, my expectation and is that 26 is going to be overpriced. Carriers will have to dramatically lower their prices going into 27. The other thing that i point to is,
00:34:52
Speaker
There is a massive expansion despite like all the noise around increases. If the carriers were super worried about the long term viability, you would not see the state, the expansion into new states the way that we're seeing it.
00:35:07
Speaker
I mean, there's there's probably 10 12 different carriers that are expanding into anywhere from 7 12 new markets for um Because they know that even though there's this short-term risk in 26, they have to prepare their business for 2027.
00:35:24
Speaker
Um, the other really important nuance that I think people miss in like the, the increase in healthcare costs for individuals specifically is, and I'll use like one prime example, take like the state, let's use the state of Colorado.
00:35:40
Speaker
So the state of Colorado, um, they got one of the highest individual increases in the entire country. It's like 28% in Denver. I think the front range was close to like 36 massive increase, right?
00:35:51
Speaker
Um, individual in Denver. So the individual 40 year old ACA plan benchmark plan, that's the same in group. That's the same an individual individual. Even with that increase is still going to be 7.5% cheaper in Denver. And the front range is still going to be 17% cheaper than group.
00:36:10
Speaker
So for the 170,000 small business, Coloradans that are on the small business exchange, it in 2026, despite these increases, still double digit savings for them to move to a model that allows them to control their costs the next year.
00:36:26
Speaker
And we'll probably see some sort of remediation and reduction in rates in 27. So um yeah, I'm extremely bullish. It's just a matter of how we pick our shots, educate the market and continue to grow.
00:36:38
Speaker
And of course, we'd love to hear, im really appreciate you kind of speaking on like these different categories, of course, of your time at United and everything, but we're looking to hear what are you excited about in the future? It seems like, of course, like that's, but within that, like, what are some of the key things that you're looking forward to with that? Like, of course, the marketplace is built out now as another key offering to get like customers really excited about what they're able to spend and what their employees are able to spend. But what are the things that you're looking forward to in the next like three to five years as that continues to kind of go upmarket, build new service offerings, and of course, hope to provide the best that consumer-centric insurance plan there is.
00:37:14
Speaker
I'm excited about a lot. I think, you know again, the the quicker that we can unlock the US consumer to make their own purchasing decisions and is by far the most important thing. um you know I would also tell you that secondarily, employers haven't been able to and control their costs. Costs have been just running out of control for years. yeah ICHRA is a mechanism that allows them to do that and focus on their business. And furthermore, you know they can have their hr and the ah HR leadership staff focusing not on just like the day-to-day business and the cost of their plan and everything else, but actually on talent recruitment, retainment, you know expansion. Like a lot of what i would say are like kind of the core business things that unfortunately have been sucked out because of this focus around healthcare costs, management of the plan, et cetera.
00:37:59
Speaker
um you know I'm also just super pumped about like the the startup industry in general, you know in a sense that everyone's talked about the impact of, and I would say, kind of the brokenness of healthcare, AI, and the way that AI can help that.
00:38:18
Speaker
efficiency is absolutely incredible. and And I think we're going to see so many advancements. like What our company is doing now in terms of how we use AI to break down you know complex insurance rates, how we use it to build code that allows our infrastructure to work more effectively, um all of that stuff is being enhanced with AI. And we literally couldn't have done it six months ago. like The team we run at that, we would probably need 4x two years ago to do what we do. Yeah. um And so I think that those evolutions will probably speed up um our ability to actually solve for like the first time, we like really solve some of the nuance and some of the crux of the healthcare system. And that's what I get really excited about. Like we should, we should be get a lot of bang for how much money that we're spending, a bigger bang for our buck. And I think that some of that will come through um ai at the end of the day.
00:39:10
Speaker
Of course. Yeah. I'm really excited for that too. And of course we'll see where like that goes and see how they can, of course, like, really build this ICHRA model and take it more and educate the customers and the people on this market. Because what I think, of course, ICHRAs are going to be super important, but a lot a lot of people really understand what they do, even though they're pretty intuitive in the first place. so i'm really excited to see where that goes and hopefully appreciate your time today. Gary, just kind of walking us through your experience at United and is going into the problem that a lot of healthcare care carriers are facing today and seeing how ICHRAs can potentially solve that. So thank you so much for your time today. Really appreciate it.
00:39:46
Speaker
Yeah, no problem. I appreciate your ah curiosity. um i appreciate your leadership on this. You know, the more people that can talk about healthcare, especially to the to the younger generations that are coming out of school right now that that see the massive problem and have ideas how to solve it, um your audience is that audience that's going to fix it for all of us. So i appreciate everybody.