This week on Bold Names, we're talking to David Cordani. He's the chairman and CEO of Cigna, one of the US's biggest health insurers. Now joining me to talk to David is another David, my colleague David Wainer, who is a healthcare columnist for the Wall Street Journal.
Really excited to talk about our fast-changing health system.
That's next from the Wall Street Journal. I'm Tim Higgins. This is Bold Names where you'll hear from the leaders of the bold name companies featured in the Wall Street Journal. Today we ask a big question, how do we fix the American healthcare system? David, thank you for joining us on Bold Names. I'm really interested in one of those areas that I know you're passionate about, which is mental healthcare. How did this become top of mind for you?
So, a couple points when you entered the healthcare conversation, the modern view of life is that the physical health and mental health aspect of a human being are inextricably linked. For all too long, our society separated those. You have a physical ailment, go see a medical doctor. You have a mental ailment, go see a mental health professional. But physical health and mental health are inextricably linked. So, guided by our mission, we lean into that pretty meaningfully. And when you step back, you could look at our society, the US alone, whether we want to talk about the global society and recognize that early onset of mental health challenges, be they anxiety, stress, or early stage depression, have a significant impact on an individual's health wellbeing, if they're employed, their sense of belonging, productivity, and overall engagements.
For those who are watching, those who are listening, who don't know what Cigna is, a big part of your business, Cigna Healthcare is the insurance arm, which provides medical, dental, and vision benefits through employers to their employees. This is a way that a lot of people access the healthcare system in the US. It's one of the largest in the US and that puts you in a position, I think a unique position. You're hearing from the CEOs of big companies, and my understanding is that they've come to you with concerns about the mental health of their employees. What have you been hearing and when did you start hearing it?
So, increasingly and amplified through the pandemic, more and more employers at the CEO level realized they had a significant mental health and mental wellbeing challenge, and they were looking and exploring and open to alternative ways to help to address that. So, beyond dealing with sickness when it transpires, how do you have programs to have early identification of, as I mentioned before, anxiety or elevated stress levels, which are gateways to depression, which are gateways to more elevated mental health and physical health challenges. So, when you think about it, there's a couple of different dimensions that exist. First, over a long period of time, less so today, there was a stigma to having the mental health topic attached to an individual. Second is just pragmatic access. In many cases, mental health professionals, therapists, starting from that dimension are smaller operations and there may not be the physical proximity or ease of access to those mental health professionals. So, destigmatizing awareness and easing access, how do we ease access? Making sure there's a physical network or the ability to access a mental health professional. Secondly, a virtual network, because virtual works quite well for many aspects of mental health or mental health therapies. In fact, some people prefer that because it's a level of anonymity. So, stigma, awareness, physical access, virtual access, all have to come to bear.
As Tim mentioned, Cigna is focused on employer plans. Why prioritize this segment?
Few reasons. One, first, it's important to recognize that the US employer market is the backbone of the US healthcare ecosystem. Point two is that each employer presents an example to form a micro community, and we have the ability to work employer by employer to understand their culture, their strategy, the respective health burden of their population. And we've proven time and time again that a more positive result. And lastly, we have been an outlier in that. We've been committed to what are the more transparent programs like self-funded. So, there's total transparency between ourselves and the employer to where and how their dollars are being spent and what the impact of those dollars are, which allow us to change or modify or tweak the programs throughout the course of the year as opposed to wait till the end of the year and evaluate it.
Tell me what has worked for Cigna when it comes to promoting mental health.
Sure, and I'll just add a few building blocks. Now you put it under an umbrella of awareness and open dialogue. So, back to that mission of improving health and vitality. We talk in our organization around that broader set of needs, access to therapists, access to counselors, access to virtual resources. And importantly, the ad I would give to it is a significant amount of energy around community activation and belonging. It's proven that having individuals have access to micro communities within their place of employment and then activating in their community through volunteerism creates a net positive mental health and overall productivity.
Not only are you dealing with CEOs as the CEO of Cigna, but you're also on the Business Roundtable. And I know that part of your effort there is working a mental health for that group, which is really kind of the mouthpiece for big business in Washington DC, working on issues that are very important to CEOs, whether they're political or social.
It's an area where I'm quite proud, quite proud of the business community leaning in versus observing. So, the Business Roundtable that is approximately 250 CEOs.
I mean, these are the biggest to big companies, right? You got Mary Barra from General Motors, Tim Cook from Apple. I mean, these are the boldest of bold names as yourself among yourself.
And a cross-section of every industry represented there, confronted with the information, identified this as an important initiative and undertaking. I have the good fortune of being the chair of that initiative. So, what has that done? It's created more awareness, it's created more information sharing, it's created more training. We've even had mental health first aid training that has been delivered to many corporations. So, net positive in terms of seeing that body of leaders lean into this, whether you lean into it in terms of making your business more vibrant or lean into it to make your community more vibrant, they intersect at the same level of actions, and we're seeing good momentum there.
Yeah, I want to talk about cost. You were just in DC testifying before Congress earlier this year about why healthcare has become so expensive in the US. And a stat really stuck out to me that the average family health insurance plan now costs more than $26,000 a year. And that, I guess leads to the question in my mind, why have costs gotten so expensive?
First, there's clearly an affordability challenge across the United States. If we want to understand the core aspects to why, you could break it into two fundamental categories, which doesn't excuse it, but you need to understand the fundamental categories so we can address it. First, on the demand side, we are demanding and consuming more services that it's in part driven by the aging of the population. That's a global phenomenon, but also a US phenomenon. And consumption grows as age grows on average, second in excess of 50% of Americans are dealing with chronic health situations. We've had an explosion in chronic care issues in America. So, that's on the demand side. On the supply side, new pharmaceuticals while in some cases or life-improving, are at a higher and higher cost every year.
Can you pinpoint the moment when this started to be the case, when the system began to crack, if you will?
I can't pinpoint the moment with precision, but if you go back into the '70s timeframe, the rate of medical cost growth, more so approximated inflation growth, so a little bit greater, but more approximated inflation growth as you come forth to the last 25 years, the rate of medical cost growth, and I mean medical cost on the broader medical pharmacy, behavioral cost growth is running at about 3X, the rate of inflation, three times the rate of inflation for last couple decades and a half. So, we could look at the last 25 years where that multiplier effect has transpired. And there's two constants that are indisputable in there. The global health profile relative to chronic conditions, has eroded and the US leads. Unfortunately, in some of those categories, there's higher medical cost consumption that are attached to that. And secondly, the higher cost interventions have grown in the last decade or two even more rapidly. Those are the two triggers that are driving the acceleration.
I'm just curious, as you look at this, what kind of role or responsibility insurance companies have in bringing down these costs?
So, the question comes down to how do you bring down the cost, or how do you slow the rate of growth? And I think there's four major ways you do so. One, you invest time, effort, and energy to help to keep the healthy, healthy in the first place. The US spends the vast majority of its resources fixing sickness after it occurs. We need to spend more resources on helping individuals maintain their health.
We're really good at sick care intervention at the end, right? We're not good at maybe on the front end of taking care of health, right?
A hundred percent, one hundred percent. Second, the category least spoken about is any group of individuals. You could take the country as a whole. We could take a state, you could take a city, you could take, an employer has a percentage of the population that appears to be healthy because they have low medical cost claims or very little, but they have high health risks because of lifestyle behavior or genetic predisposition. Good health service programs could help to identify those risks before they blossom in a chronic event or into an acute event. You could see pre-diabetic, you could see pre-coronary disease, you could see a high risk maternity event and intervene and help a mom go full term, which is in everybody's best interest, starting with the health of the baby and the family unit and the community. So, advancing around the healthy at risk. In the case of the chronic population, the evidence-based care needs to be followed. It's something where the health service companies like ourselves do a great job, and that is typically medication compliance. If you're a diabetic, being consistent on your medication is mission-critical. If you're on a coronary clinical management program, medication consistency is mission-critical around your cholesterol lowering medications, et cetera, et cetera.
One of the things insurers get criticized for is their use of prior authorizations. Basically, that's the requirement that doctors get approval from the insurance company before providing certain treatments. How do you think about the way these prior authorizations are currently working?
