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DOUG:          Welcome to the Everlong Edge Podcast, I’m Doug Truax, Founder and CEO of Everlong. In this episode we’re going to talk about how one employer got off a decade-long hamster wheel and the revolving door of shuffling carriers, and a whole lot more with her, Terrie Ames from M-L Holdings out in Denver.

So, we all know the cost of employer-provided coverage continues to rise year after year and without taking decisive action, beyond the status quo, the employer is generally left with one of two bad choices. You could either, one, pass the cost on to the employees, and it’s making it harder to attract and retain top talent; or, two, you could absorb the increased cost yourself, which creates long-term financial headwinds that only masks the problem.

So, at the end of the day many employers simply can’t see a way out of the rising benefits costs, and they’re left running on the same old hamster wheel year after year, getting nowhere, while blind to the cost savings that are within their reach. So, what I’m saying is, stability is a choice. You don’t have to blindly leave it to chance and accept the status quo.

There is a better way that enables employers to offer the same level of group health benefits at the lowest cost possible and improve the health of their employees. Employers who are members of Everlong’s High Performance Health Insurance Captive get to take the profits the health insured’s carriers make and pay that money back to themselves with an innovative insurance and funding solution.

Members also reduce long-term claims costs through sophisticated initiatives to improve employee health. In fact, our special guest, coming up in just a minute, shared with me earlier how one of her employees felt like they got this huge raise just because their health benefit premiums are so much lower and they’re doing a lot more, like no-cost vision insurance, HSA match, and no-cost biometric screenings, just to name a few. So, as a result, health benefits have gone from an expensive burden to an excellent recruitment tool for our guest.

Prior to joining Everlong’s High Performance Health Insurance Captive our guest, Terrie Ames, described her experience with the same old tired solutions as “a decade-long hamster wheel and revolving door of shuffling carriers.” In 2010 her company was presented with a 26% rate increase on their fully insured health plan. Terrie and her CEO agreed they were not going to spend a penny more on a fully insured plan and decided it was time to take decisive action. So, with me now is Terrie Ames from M-L Holdings in Denver. I’ve known her for a while, super happy to have her on, so thank you for being on the show.

TERRIE:         I’m glad to be here, Doug.

DOUG:          Alright, Terrie, so let’s go back to, I guess it would have been 2009, when we were first talking, because you joined in 2010. What was that like back in 2009 when we were having these conversations and you were going through some turmoil, like the typical renewal turmoil of your fully insured product there that you were buying? We were chatting and you were hearing some things, so what was it like on your end to kind of make that leap to where you are now?

TERRIE:         Well, to be honest with you, back then I was in HR, and the one thing I dreaded more than anything was open enrollment. The reason was we were always chasing after the lowest bid, so we had a new vendor, a new network every year, our prices went up, and our employees were never happy.

I never got to make the decisions, but I had to get the information and sell it to our employees and kind of make it sound like it was a good deal, and that was really hard to do. In 2009, we were looking at, I believe, a 26% increase, which, previous years it was never a question of if our rates were going to go up, it was just a question of how much, so we always expected at least a double digit, but when it got to 26%, Mr. Matz, the owner of our company, he said he refused to pay any more money.

And so we had two long-term brokers with two of our organizations and they couldn’t do anything for us. And so we got a call, and you know, I thank God all the time, that we were put in touch with you, and your organization made some promises, and at the time, I gotta say, I think well, that’s kind of too hard to believe, but I thought well, it’s better than a 26% increase, and I was planning on getting out of the benefit world, so I thought it would be somebody else’s problem the next year.

As you know, I think we’re going to be doing our 12th renewal, and it is every single thing that you told us it would be. The company, we may have done some things wrong in the past, but the one thing we’ve gotten right is our health coverage, our medical coverage. Si, it’s like a shining spot, and that was because we say your vision and we became a member of the Captive.

DOUG:          Well, thanks for your courage back then, I know it wasn’t easy, because you were going through a lot. It is what you say, you and Bob in particular have always been extremely innovative and willing to look at new things. It obviously has played out in the success of your company, too. But this is definitely one of those areas where you said, you know, I’ve had enough of this, and we talked about hamster wheel thing, you just kind of keep doing the same thing over and over, you’ve got to do something different.

It takes courage to make the leap and you definitely did it, especially coming from that fully insured world. I think we’re up to now, different back then, but now we’re probably about 60% of the groups that join are coming from currently self funded and they join the Captive. So, we have another 40% that are like you, that were fully insured, the whole thing is kind of new to them and they make that leap. They are universally, what you say, they’re happy they did it. I’m glad to have you on because you’ve got the longest-term experience in this, so it’s great to have you talk about it.

One thing we’ve talked about before is I love the idea of the fact that it helps your company for sure, but get to help your employees. I know you so well, you are really looking out for the employees, so you want to look out for the company, obviously, but you’re looking out for the employees, too. You told a story one time at an annual owner meeting that really touched everybody in the room, including me, and I’d love to hear you share it again, about a situation that happened and some feedback you got from some employees once they realized what was going to happen with their costs.

TERRIE:         Sure, Doug. The goal back then was just to be able to effectively manage our healthcare dollars. We didn’t want to dilute coverage, but we wanted our employees to be comfortable not only with their coverage, but what they were paying. When we made the change it was kind of like jumping out of an airplane without a parachute because we didn’t really know what to expect.

One of the times I remember when I really felt like, wow, we really did make a difference, we saved a lot of money, but what happened one time is we had an open enrollment and we had a lady sitting there and she came from one of our competitors, and she just kept looking at the rate sheet. And she said, “Is this weekly? I thought we got paid bi-weekly.” She could just not believe what the rate was going to be for her share of healthcare. Before she just had coverage for herself, not for her husband, and she was able to get coverage for her whole family for less than what she was paying for single coverage, and she said it was just like getting a pay raise.

She said, “I just can’t believe this,” and there were tears in her eyes, because she hadn’t covered the rest of her family because she couldn’t afford to. To hear that, her name is Terry, she’s still with us, and she’s one of our biggest proponents. Because, with the Captive, and the way that we have our plan, we’re able to cover families. We pay the same percent when it’s family, individual coverage, the same tier of coverage, and we’ve never had to do the spousal carve out or not include people, and the reason we’re able to do that is because we’re able to manage our costs and know what we’re going to be able to spend.

DOUG:          Yeah, it’s so great to have that feeling of that control that you didn’t have before. It’s like that classic, you’re looking at the 26% increase the last time you were fully insured, and now, in self funding we talk about, hey, you’re going to have claims, there’s stuff that’s going to happen, but if you can kind of smooth that out and get things under control, one of the things that we’ve talked about before is when you come to the annual owners meeting and we give you the right, this is where you were when we met you, and that’s your trend line, and then this is what’s happened since you joined.

I think you guys are well past eight figures now in savings, that’s the kind of control and stability that people are looking for. That translates into great stuff for the employees. Why don’t you talk a little bit, too, about how it works. I know you have a lot of contact, you guys have different internal, I don’t know if I’m speaking out of turn here, but different internal profit/loss centers and things like that with different companies. How has that been for you with interacting with those heads of those divisions and things like that, when it comes to hey, we can get a better deal with this. They’re probably enjoying this too, right?

TERRIE:         Well, you know, Doug, you probably don’t realize this but because of you we have what we call shared services now at M-L Holdings, and our first shared service was benefits. So, before, each subsidiary would provide their own coverage for their employees and then once we moved to the Captive, we started with our two largest subsidiaries, McClung-Logan and Power Equipment Company. And since then, we’ve added all our subsidiaries.

So, M-L Holdings, we have over 1,000 employees. We have 500+ that aren’t union and they’re all on our Captive. So, what happens is our subsidiary presidents, they love this, the CFOs love this, because they don’t have to worry about renewals, they don’t have to worry about the cost, they know exactly what it’s going to be. We’re able to manage our costs, so what we do is we leverage the strength of our holding company in order to reduce rates on our stop loss through the Captive.

You talk about some trend lines, we always send our census out a couple times a year, because I want to make sure we’re doing the right thing, and nobody can even touch it. We’ve had companies, brokers that come to us, I tell them what our stop loss is, and it’s been even, we’ve had some bad years, we’ve had some great years. I think our stop loss this year was reduced from last year, because Veritas, or I mean, Everlong [laughter] is always trying to help us make good decisions.

DOUG:          Your broker got acquired [laughter].

TERRIE:         By increasing our spec, which was the first time we had done that in years, we were able to reduce our stop loss even more. So, it’s just phenomenal how this works. I just don’t know why everybody doesn’t do it, I really don’t understand it. I think a lot of it is just taking that leap of faith. So I figure, you doing things like this and educating other people will give them the courage to do it, as well.

DOUG:          I think that’s right. You and I have talked about this too over the years, when you say that to me, why doesn’t everybody do this? And I say, I know, they need to. And so that’s what we keep talking to people about and they just have to have that moment where they say it sounds great and I’m going to give it a shot, lots of people are doing it. And that’s why it’s super great to have you on here, as well, to talk people through that and give them that level of confidence that maybe they don’t have, and maybe just talking to us about it or their broker.

One more thing I want to cover, too, is the stability of things. I mentioned a second ago, even though you can reduce your cost and get things under control, it’s still stop loss, you’re still going to have high claimants and things like that, and then we have situations, you kind of know this going into it, you can even on your stop loss policy, if you’re independent, if you’re out on your own, stop loss trend is like 19-21%, depending on you’re talking to, so you could have a bad year and your premium is going to jump up, right? So, talk a little bit about what your experience has been over the years with regard to the stability of the stop loss pricing even in the face of what you’ve had at certain times over the years with claimants.

TERRIE:         Well, I think that’s what’s made such a big difference to us. The last time I looked, the trend was 23% increase on stop loss and so we’ve been able to keep that steady. You look at a trend and it goes up, so you think stop loss is going to go up. But being part of the Captive, because we’re not just going on our history and what’s happening with us, it’s with everybody else. It just seems like if we have a bad year, than there are several that have good years, we have a great year, there might be someone else who doesn’t have the great year, but it always just seems because of that, the way you have it figured out, that our costs are really steady, they stay flat, really.

It’s amazing, if you really look at the increases and decreases it’s year, it’s pretty steady, which is really saying a lot. I don’t know any other type of insurance in our organization that hasn’t increased, general liability, a lot of other ones, it’s almost impossible to insure an airplane right now, it’s expensive. So, the one area that we’ve been able to really control, which is what you promised us in 2009, we’ve been able to manage our healthcare spend. And to add something else, we have employees right now who are paying less premium for 2021 than they did in 2009.

DOUG:          Ah, how bout it?

TERRIE:         Now, we’re not comparing apples to apples, because we had different plans, but 2009.

DOUG:          I understand, sure, sure.

TERRIE:         Some of them were paying several hundred dollars more than they are now.

DOUG:          Absolutely, and that’s such a credit, I’m thankful for this conversation and for what you’re sharing about what we do and everything, but I would tell you, too, a huge part of our success is having people like you, and you in particular, for your cell, the Longbow Employee Captive, you start to get to know the other employers, and you in particular, at the owners meetings, and things like that, you’re sharing what you’re doing, everybody is talking about things and getting to know each other better and then as a group we keep the cells so that they’re small enough, that people know each other, but they’re big enough to get huge economies of scale on the stop loss premium and everything else, but there is a sweet spot in there, and you guys all know each other and share ideas, that’s been a huge part of what you’ve done over the years, so my thanks to you on that.

TERRIE:         It has.

DOUG:          One last thing, talk to the innovation. I know you and your broker, I think she’s great, too, you guys have done fantastic work over the years of just tweaking this and moving this around, and talk to that real quick as we kind of finish out here.

TERRIE:         What’s great, first of all, with having the other companies in our cell, I pick up the phone sometimes and I can call somebody, I can talk to them about wellness, I can talk to them about reference-based pricing, it’s not like you’re out on an island. Before, we would hear from our broker once a year right before renewal, and we’d never hear from them the rest of the time. With Everlong we have set meetings, we have the owners meetings, and so you never feel like you’re by yourself.

Another thing with Everlong, the provide some tools to us to help manage our cost at no cost to us, like Spring Buck, different things that we can use, and we’re not charged for that. I feel like that’s pretty unusual. So, that’s one thing that they do. Our brokers, what they’ve helped us with, Sharon, I’ve dealt with her since 2009, I think I met you and her at the same time. If we have something that we’re not sure how to handle to what to do, we bring it up. We had an incident recently where we had a very high claimant and sometimes the specialty drug costs, you know, you worry about them, you think, what are we going to do.

A couple years ago, maybe it was three years ago, where the Captive thought it was smart to put in a transplant rider, and so that was kind of the rule of being in the Captive, was to have the transplant rider. We found out just recently that we have a transplant coming up. Normally that would keep me up at night, but because of your guidance and thinking ahead and knowing what works for your people, I can rest easy because we have that transplant rider.

DOUG:          Yeah, sure, sure.

TERRIE:         So, I feel like you’re always looking ahead. I know right now a lot of people are looking at specialty drugs and different things like that, and trying to come up with business models where it doesn’t hurt, where it doesn’t bankrupt any of your employers. I think that’s really important. It’s like once we’re with you, I used to feel like we were your only client, and I think we were maybe one of a handful, but I still feel like that, and I know you have a lot more. So, I feel like the hands on attention that we receive from Everlong is second to none.

DOUG:          Aw, thanks for saying that.

TERRIE:         It’s true.

DOUG:          Well, you know, you’re a real joy to work with, you really are. The way you take it on and you really dig in and try to do the best for your employees and the group, it’s really admirable. That’s why when we talk about we should get a client on, well, obviously, we want to get Terrie on and talk about this.

TERRIE:         People probably think you pay me [laughter], but it’s exciting, I’ve met a couple people that I’ve given references to at some of the meetings, and they’re just so grateful. I’m just glad that you’re giving people the opportunity to hear about this. It almost sounds too good to be true, but it’s really not.

DOUG:          Awesome, well, hey, thanks so much for coming on today, Terrie, and I appreciate all your efforts for your group and all the help you’ve given to your fellow Longbow cell members over the years, too, really great. I’m sure we’ll ask you back on at some point in the future, and I’m sure I’m going to see you soon enough, too, at the owners meeting here coming up. So, thanks for coming on today, Terrie.

TERRIE:         Looking forward to it.

DOUG:          Alright, so thank you, Terrie, for sharing your Captive journey with us. I’m positive your insights will help other employers find a better way to purchase group health insurance and finally get off the hamster wheel. So, as you can see, there is something employers can do about the never ending increases in their group health insurance costs, and all without having to make bad choices. The only choice innovative employers and brokers need to make is to take that initial step off the hamster well and join Everlong’s High Performance Health Insurance Captives.