Episode #355: Will PPO Plans be relevant in 10 Years?

Naren Arulrajah: This is the Less Insurance Dependence podcast show with my good friend Gary Takacs and myself, Naren Arulrajah.

Gary Takacs: We appreciate your listenership, your time, and most of all, we appreciate your intention to reduce insurance dependence in your practice. Our goal is to provide information that will help you successfully reduce insurance dependence and convert your practice into a thriving and profitable dental practice that provides you with personal, professional, and financial satisfaction.

Naren Arulrajah: Hello everyone. Welcome to the Less Insurance Dependence podcast, the official podcast of the Reducing Insurance Dependence Academy, www.rid.academy.  Membership to the Academy is a gift from Gary and I in appreciation for your listenership. Visit www.rid.academy, and don’t forget to register for our annual event. It’s on October 24th. When you go to the www.rid.academy website, you’ll learn more about it. Five hours of CE, we have amazing speakers. This is our fifth annual summit, so please check it out, sign up, and looking forward to seeing you on October 24th.

Today’s podcast is titled, Will PPO Plans Be Relevant in 10 Years? It’s a really interesting and provocative question. I think it’s making us think, okay, fast forward so many years into the future—would we have PPO plans and how would dentists practice dentistry? So, Gary, I’m really excited to explore this. I know lots of changes are happening. The Reducing Insurance Dependence Academy, for example, has 1,500 members now. The people who are sick and tired of PPO plans is growing, and the people who are taking action is growing. So what do you think, Gary? What does your crystal ball tell you?

Gary Takacs: Well, you know, Naren, I wish I did have a crystal ball. It’s a great question—will PPO plans even be relevant in 10 years? And I’d love to just confidently say, no. They are going the way of the dodo bird. PPO plans are going extinct. I would love to be able to say that, and I’d love to be able to back it up with data. However, I can’t do that, and I don’t have a crystal ball, but I do have a pretty good perspective on our profession, and I’ll share with you some thoughts that I have.

You know, it’s interesting—if you look at the evolution of dental insurance, the history of dental insurance only goes back to the mid-1960s, Naren. So think about that—the mid-1960s. It’s 50-plus years of history.

And in the beginning, dental insurance was created by dentists for dentists. Really, right? And look what it’s evolved to—look at the, you know, what-show it’s evolved to today, right? I’ll keep it G-rated to save our podcast rating. But it was literally started by dentists for dentists. And if you think about it, in the 1960s, the average annual benefit was $1,000 a year. Now, we have to go back in time to put that in perspective. Let’s say 1965—a thousand dollars. If someone got dental insurance benefits, dental insurance would pay up to $1,000 a year max.

What did it cover? A crown in 1965 was $150 on average. And how much does insurance pay for a crown?

Naren Arulrajah: $150. If it’s a thousand dollars, pretty much—

Gary Takacs: How much does insurance pay?

Naren Arulrajah: Half.

Gary Takacs: Half—50%. It’s always been covered at 50%. Yes. So if a crown’s $150, the patient pays $75, the insurance company pays $75. And if they have $1,000 of benefit, how many crowns can they get?

Naren Arulrajah: They can easily get—

Gary Takacs: I’ll do the math for you. It’s between 13 and 14. Thirteen point something crowns. Let’s round down, call it 13 crowns. Thirteen crowns is not a full-mouth reconstruction, but in two years with the benefits, they could have a completely restored mouth.

Today, there are still some insurance policies that have a $1,000 max. What does a $1,000 max cover today with today’s fees?

Naren Arulrajah: Not even one.

Gary Takacs: One tooth, maybe.

Naren Arulrajah: Maybe, yeah, exactly.

Gary Takacs: If it doesn’t need a root canal. If it needs a root canal, we’re already out of the benefits by covering the root canal. So it’s really morphed into something that’s a joke—an absolute joke. Now, more and more patients are choosing not to have dental insurance because they realize it’s not really insurance at all.

Naren Arulrajah: Half of the Americans don’t have dental insurance.

Gary Takacs: It’s growing. That segment is growing. People are choosing—it’s very different than health insurance. We all need some health insurance coverage in case of some catastrophic event that would put us in the hospital. Exactly. If you’re in the hospital and it involves a multi-night stay, we could be talking about hundreds of thousands of dollars, if not millions of dollars, depending on what’s going on. So we need insurance to cover that.

Health insurance is very different. But what I see happening is that consumers are much wiser today than they were. We read food labels. Remember the time when we didn’t have food labels?

Naren Arulrajah: I mean, we had, what do you call it, corn syrup, right, in everything. But now people are very careful about what they put in their mouth.

Gary Takacs: And there are patients or employees who are realizing the benefit that the employer is hoisting on them is really no benefit at all. In terms of what it covers, it’s a free cleaning twice a year. Exactly. That’s it. But it doesn’t really cover any needs beyond that. It’s so limited in what it covers that it really isn’t a benefit at all.

One of the things to ask your patients in your practice is, "Is your dental insurance provided as a benefit of employment—meaning your employer is paying for it—or do you pay for it yourself in the form of a payroll deduction?" You know what most people say when you ask them that question? "I don’t know." Well, you could say, "Look at your pay stub and see if you are paying that in the form of a payroll deduction." If you are, tell your employer politely, "I don’t want that anymore," and encourage them to purchase your membership plan at your office.

Naren Arulrajah: Two hundred fifty-three dollars, $300, $350—it’s—

Gary Takacs: It’s peanuts. Your membership plan is so much better, without the rules, without the games, without the restrictions. And if they’re paying for it themselves, they’re getting a much better value by buying your membership plan. The other thing you could tell the patient, if they really have a lousy plan—and most of them are really horrible—is talk to your benefits supervisor at work. This is assuming it’s provided as an employer benefit. Let them know you’re not the least bit happy with this dental plan.

Imagine a group of employees bringing that message to the benefits supervisor. And by the way, if you’re an office that happens to know of a good plan—because there are some good insurance plans that pay good benefits—have them switch to this plan. Encourage your benefits supervisor to switch to one that’s actually better.

Gary Takacs: Right. But you can create a lobby in the form of your patients by telling your patients, “Let your benefits supervisor know that this lousy Delta plan—wait, did I say Delta? Yeah, I did.”

Naren Arulrajah: Yes, you did, Gary.

Gary Takacs: Yeah, I did. That wasn’t an accident. The Delta plans are horrible—absolutely horrible. They’re paying less and less and less. Their reimbursement is going down, not going up, in the face of ever-rising inflation and wage inflation in particular. Yes, Delta has the nerve to lower your fees.

Exactly. And as a result of that, Naren, there is a groundswell effort afoot—a groundswell, individual effort of dentists just saying, “Enough’s enough, I can’t make this work.” If you do the accounting in your office—if you actually do cost accounting—you may discover on many of those really bad Delta plans…

Gary Takacs: It’s costing you money to provide your patients’ care. If it’s costing you money to provide your patients’ care, does it make any sense to have that plan in your practice?

Naren Arulrajah: No.

Gary Takacs: No, not at all. So my crystal ball—I’ll come back to the question at hand—says that we’re going to see some changes coming up because this current system doesn’t work. It doesn’t work for the dentist.

Think about the entities that are involved in the dental insurance game, Naren. There’s the dental insurance company, the patient policy, the dentist or dental office that provides the care, the patient that receives the care, and the company that buys the policy. That’s it—the four entities. The only one that wins today is the dental insurance company.

And by the way, this has sort of been disclosed—that the insurance companies are the only ones that win. How has that been disclosed? Now, think about some recent events. What are some recent events that have disclosed the dirty secret that insurance only works for the insurance company? What are some events that have occurred?

Naren Arulrajah: I mean—

Gary Takacs: In public perception?

Naren Arulrajah: Yeah. Are you talking about what happened in New York?

Gary Takacs: Yes.

Naren Arulrajah: Yes. I mean, that’s, uh, I think it’s kind of—

Gary Takacs: Go ahead and define it.

Naren Arulrajah: You mean the murder in New York? The person who was shot—

Gary Takacs: The assassination of—

Naren Arulrajah: Assassination, yeah. The CEO of one of their top dental insurance companies, right?

Gary Takacs: No, it was a health insurance company.

Naren Arulrajah: Health insurance, sorry. Health insurance company, yeah. And of course, the public outcry—there were a lot of people who were, quote-unquote, you know, even though I’m not a fan of this, kind of on the side of the vigilante.

Gary Takacs: You know, you can’t be a fan of vigilante justice. But when they discovered that it was—look it up on Google, but I believe it was UnitedHealthcare—

Naren Arulrajah: I think you’re right, Gary. I’m pretty sure—

Gary Takacs: I’d like to confirm it for sure for our listeners.

Naren Arulrajah: Yeah, yeah.

Gary Takacs: But I believe it was UnitedHealthcare, and they discovered that in the previous year, hundreds of millions of dollars of claims were denied because of the use of AI. And what kind of light does that shine on the insurance company?

Naren Arulrajah: Poor light, for sure.

Gary Takacs: Yeah. Think about another—

Naren Arulrajah: The gentleman who was killed was Brian Thompson.

Gary Takacs: Was it United?

Naren Arulrajah: Yes, UnitedHealthcare. He was the CEO of UnitedHealthcare at the time.

Gary Takacs: There are three NFL stadiums that are named after an insurance company. Now, why do insurance companies want to name a stadium?

Naren Arulrajah: Marketing.

Gary Takacs: Marketing for who? For patients?

Naren Arulrajah: No, for the companies—because they want to give them the box. So the CEOs of these employers show up, they can give them a box at the game.

Gary Takacs: So they pay hundreds of millions of dollars in naming rights instead of benefits to the people that are insured. And the public has gotten—you know, you’re not in good hands. Do you remember that slogan? "You’re in good hands."

Naren Arulrajah: Good hands.

Gary Takacs: What does that say—State Farm? You’re in good hands with State Farm. You know what? You’re not in good hands with State Farm. The public is becoming more savvy, and I think there’s an effort afoot to really make PPOs become obsolete, at least in the way they’re designed today. It’s not a win-win—it’s a win-lose.

And when insurance companies are making hundreds of millions of dollars of profit on insurance—I mean, I am a capitalist. I’m in favor of profit, Naren.

Naren Arulrajah: You are too.

Gary Takacs: A hundred percent. So are our listeners. Hopefully, they’re running a profitable enterprise in their dental practice. By the way, if you’re not running a profitable enterprise, schedule a coaching strategy meeting with me so you can get profitable. So we’re all in favor of profit.

But I think the difference between a dentist in favor of profit and an insurance company in favor of profit is that ours is beneficial profit—we profit by actually providing good and taking care of people. The insurance company profits by taking advantage of people.

You know the Medical Loss Ratio—MLR—do you remember that initiative, Naren?

Naren Arulrajah: Yes.

Gary Takacs: MLR—it was 2022. It was a ballot measure in the state of Massachusetts that the Massachusetts Dental Association got enough signatures to put on the ballot.

Gary Takacs: And the ballot—if it passed, and of course it did pass—would require dental insurance companies to also have a loss ratio, meaning that they’d have to pay a certain percentage of dollars taken in from premiums directly for patient benefits. Before this existed, they were only obligated to pay around 50%. So, in other words, 50% of the revenue they took in from premiums had to be paid directly to policyholders—to patients.

Now, because of the Medical Loss Ratio getting passed—by the way, it was an overwhelming landslide win for the Medical Loss Ratio—they now have to pay 80, I believe it’s 84%, it’s either 82 or 84%, of every dollar that’s taken in on premiums. And I think we’re going to see more of that, and when we see more of that, it’s going to change the face of insurance.

So I think the future is going to change. I think it’s going to get better. I see this as kind of the low-water mark. I guess it can’t get any worse—until Delta cuts the fees again, which they’re going to do. So there, it gets worse.

But what can you do now, if you don’t want to wait around for 10 years and see what happens? What you can do now is successfully resign from PPO plans. That’s what you can do to be in control of this. And there are more and more dentists that are doing that individually—they’re just saying, “Enough is enough.”

It’s getting harder for patients to find offices that accept their PPO plan. And when that happens, things will have to change. Because if you can’t find anywhere to go that will take this bad plan that your employer is foisting on you, that’s going to force some change.

Gary Takacs: But it really is going to change the nature of that. What you can do now is successfully resign from PPO plans. Remember, you don’t have to go all the way to fee-for-service. We call it reducing insurance dependence—like the name of this podcast, the Less Insurance Dependence Podcast. You don’t have to go all the way, because every time you successfully resign from a plan, you’ve strengthened and improved your practice.

Naren, I’ll let you have the closing comments. What do you think about my prediction? My prediction is that it’s going to change, and it’s going to be forced to change, because what we have right now doesn’t work.

Naren Arulrajah: I agree with you, Gary. I mean, already we know the number of doctors who are literally saying, “Enough is enough,” and leaving insurance PPO plans. There’s a huge groundswell of interest in reducing insurance dependence, and every week we see people getting on this journey. Some have dropped one plan, some have dropped 15 plans. We are also noticing, like you said, patients saying, “Enough is enough,” and half of Americans don’t even have dental insurance.

So I think these trends have been going on for the last 10, 20 years—they’re just getting faster and faster and faster.

Gary Takacs: Everything’s accelerating. Peter Diamandis talks about the rapid acceleration of change, and this is another example of it. The PPO heyday—when the PPO plans were in control—we’re already past that. I think we’re already past that.

Naren Arulrajah: I think the last thing that’s driving this trend is, especially after COVID, people are taking health a lot more seriously. And the relationship—especially with a good, relationship-driven dental practice—has grown exponentially because that’s the closest healthcare relationship they have. Everyone is starting to understand the oral-systemic connection and how important oral health is for all kinds of reasons.

So I do think these are not reversible trends. Are people going to be less knowledgeable and less interested in their health in the future? I don’t think so. These are all trends that are accelerating. So I agree with you, Gary.

Gary Takacs: Yeah. Well, at the risk of sounding self-promotional, I’ll do it because I’m so passionate about it. If you’re sitting there wondering what in the world to do today—not waiting 10 years—schedule a coaching strategy meeting with me. Go to thrivingdentist.com/csm.  That meeting will be with me, and we can talk about your practice and some steps you can take. Whether you become a client or not, you can take some steps to improve that.

There’s no reason to wait. I don’t like to be passive in this. There’s no reason to wait with things that are outside of your control. What’s in your control is your practice format. We’ve worked with practices in all 50 states—over 400 practices—successfully resigning from PPO plans in every locational environment.

Gary Takacs: Urban, suburban, large town, medium-sized town, small town, remote, rural, company town—we’ve been successful reducing insurance dependence in all of them. And every time we resign from a plan, it strengthens your practice. So, no need to wait. Go to thrivingdentist.com/csm. I’d love to meet you there and talk about how this might apply to you.

On that note, Naren, thanks for your thoughts on this topic, and thanks to all of our listeners for the privilege of your time. Naren and I look forward to connecting with you on the next Less Insurance Dependence Podcast.