By Taylor Davis
Some of my memories of Blockbuster (disrupted by Netflix) and taxis (disrupted by Uber) are very similar. Very paternalistic, protectionist, and offering very little value themselves. BUCAs feel the same way.
Five reasons why I believe that BUCAs will see the bottom drop out of their business in the next 5 years:
#5: Their Core Business is Not that Complicated
Being a taxi driver is not rocket science. Contracting healthcare networks is also not rocket science. You are not doing the brain surgery–you are just negotiating the price.
#4: Legislative Changes
The 401(k) code was adopted in 1978 and It took 20 years for the first ERISA class action lawsuit surrounding a 401(k) to be filed. In the following 10 years, 800+ of the largest US employers were sued for fiduciary breach on their 401(k).
It’s been just over 3 years since the passage of CAA 2021, the J&J and Mayo suits were just filed, and we’re already tracking another 30+ potential class action suits for fiduciary breach on health benefits. Broker kickbacks are about to be in the spotlight–a key to BUCAs keeping uncompetitive plans in place.
#3 Products Don’t Stand Alone.
BUCAs pay insurance brokers 3-6% of overall premiums/spend because their products are so good and they stand alone. Wait, no, because the are commodities and can be easily replaced. A growing group of progressive consultants are seeing more business every year as employers begin to wake up to the conflict of interest in having a broker paid by the networks they are selling.
#2 Inefficient and Overpriced
Walmart has started building relationships with what they see are centers of excellence across the US, and seeing their costs drop by double digits last year (https://lnkd.in/gBfnErTQ). How? They avoided going through BUCAs and are direct contracting themselves
#1 Everyone Hates Working With Them.
Sometimes employers are shocked to learn that hospitals and providers generally dislike working with the BUCAs. The recent United Healthcare hack was a great example. Just as employees suffered with delayed care, provider organizations struggled with revenue hits. United Healthcare, by many accounts, did little to help with the pain in either group.
