WEX Inc. (WEX) Earnings Call Transcript & Summary

Thank you. Okay. So we're going to get started with our next panel, which is empowering beneficiaries through consumerism. So I'm going to invite everybody to come up here. First, Daniel Barasa, who is a portfolio manager with us at Gabelli Funds. Then we have Brad Bennion, EVP, Strategy and Corporate Development at HealthEquity; Chris Byrd, SVP, Health and Benefits at WEX; Jill Dailey, VP, Commercial Product at Aetna; and finally, we have Jesse Horowitz, SVP, Member Experience at Oscar Health. So thank you all for being here, and looking forward to hearing your panel.

Thank you, Kevin, for the introduction, and thank you to all our panelists for being here today. We'll dive right into our conversation today, exploring how we can empower consumers to take a more active role in their health care decisions and spending and hopefully help address some of the high rising cost of health in the U.S.

Brad was hoping to start with you, consumer-driven health care and empowering individuals to make cost conscious decisions. That's been a focus for the industry for about 20 years now. Despite that focus, as we saw in the slides earlier, U.S. health care spending continues to increase, now approaching about 20% of GDP. What do you think is happening. Where do you think that focus has not produced meaningful reductions in the spending on U.S. Health Care?

Yes. Great question to start this panel with Daniel. Well, I think we've made a lot of progress and advancements in aligning consumer incentives with things like HSA's transparency of value, meaning quality over cost as well as enhanced consumer education. At the same time, there's been significant advances in the cost of medical technology as well as there's an increased cost burden that's been placed on the United States with aging population, with obesity with a number of significant things along the lines of neurodegenerative diseases. All of those things have contributed to the fact that it's difficult to keep pace with the cost of health care going up. And the United States health care system has been very, very quick to innovate and create solutions that are really focused on a pound of cure versus an ounce of prevention, and those solutions and the associated cost with those solutions have outpaced and outstripped the ability for a more consumer-focused health care environment to be able to keep pace. Now the good news is that we are seeing some green shoots, I believe, in the market with things like LASIK for eyes, now lower-cost GLP solutions available as well as the ability for consumers to actually go out and see the cost and price of different solutions, things like muscular skeletal physical therapy that's now available via a virtual environment. All of these things, I believe, point to the fact that if a consumer has correct information, if they have timely information, if they're properly incented to act, then they can actually take and drive behavior that brings down the cost of health care. But we need to get a lot more people into accounts similar to health savings accounts to align that financial incentive so that consumers actually are motivated to help make those decisions and bring down the cost of health care.

Jill, Jesse, any insurance perspective?

Yes. Maybe I'll just build on that for a minute. Agree with everything you've said, I think the one thing is we haven't made it easy. It is so hard to have health care be a shoppable experience. So we are moving in this direction, but we have transparent pricing, but you go to a provider and all of a sudden, they do an additional test and what you thought it was going to be going in isn't that or you're in there and you see what the list price might be, but you have to understand what that might mean if you have insurance and what that out-of-pocket responsibility is. So while we are starting to move in the right direction, I mean, this system is so complex, and I think we all have -- see plenty of opportunities to simplify.

So it's fair to say that the results have not matched the ambition One of the ways that the industry has tried to push consumers is through pushing more of the cost towards the individual through plan designs. And one of the examples, obviously, is the high deductible plan. Jesse you've seen these plan designs in action. Why do you think -- to what extent do they actually reduce the cost? Or do they actually just introduce more complexity for the consumer?

Yes. Look, it's a great question. I think you kind of have to look at 2 parts of the equation. The first is the kind of theoretical does aligning the consumer's wallet with their care, help drive down cost. And the answer is almost certainly, yes, that's just how economics work. And so if you make a market where consumers are directing their dollars, that's going to drive different behaviors. The other side of it, however, is that there is extraordinarily limited choice. And so for the vast majority of Americans who get an insurance to their employer, you're buying -- you have a very finite set of products that probably have a broad national network, have very generic coverage. It's one-size-fits-all for a population that happens to work together. And so maybe you have more skin in the game, but the cost of that is just like the baseline is much higher than it ought to be. And so I do think that it's the right levers. We need to create those levers. We need to have the price transparency as you mentioned, we need to have the simplicity of understanding not just this is what it meant to cost and then if something totally different happens after your EOB comes 2 months later. That's how health insurance works right now. I was thinking about this, but on the way in here, you can literally buy a Tesla on your phone, right? Like you -- consumers expect to be able to do not just the basics, but significant purchases. You can't do that with health care. And I do think that the alignment of I got to pay for this care, I need to pay for more of this care works only when everything else underneath that lines up.

And speaking of price transparency and simplicity. Obviously, on the policy side, the federal government has stepped in with several policies such as price transparency requirements for hospitals, surprise building protections and even more recently with the Trump administration announcing TrumpRx, where we could potentially have a bit more transparency on drug pricing. Chris, how do you see these policies affecting consumers?

So I think we are making progress, but I think it's gradual. And there's a lot in that question, and I'll try to unpack it as quickly as I can. I want to start on transparency because we started to talk about that. And if you think about it in a very holistic sense, anywhere else in the economy where you have a truly functioning consumer economy, you have information. It's not just data, it's information. What the early Trump 1.0 transparency initiative did, it began to break down silos of information that exist in health care. Everybody thinks that they own the data. The reality is that, we own that data as consumers. That's the law, but the bottom line is the PBM wants to silo the data, the health insurer wants the silo the data. The pharmaceutical manufacturer want to silo the data and the provider system wants to silo the data. And so we're trying to break down those walls, but it's not enough to have data because the average consumer can't read data. I mean data in a machine-readable format. How is that consumer-friendly. And so what we -- I think we'll begin to see increasingly is tools that actually will allow you to go in and they will turn that data into information that the average consumer can actually understand and used to make reasonable and informed health care decisions about where they want to get their care and what their financial responsibility is going to be. With respect to surprise medical billing, I mean, it's amazing to, I think, all of us that it took as long as it did to recognize the fact that if you go into facility for a surgery and suddenly the anesthesiologist turns out not to be in network. You have no idea that, that is taking place. And all of a sudden, you get this huge bill because you have a $5,000 deductible and you're still responsible for it. And the difference between in-network and out-network is this. What we found in reality so far, I think, and I would invite you guys to say something about this is that there's all these fights, right? There's fights between insurers and providers about, okay, what should you get paid. And the consumers kind of call in the middle of that, we're not where we need to be. And in drugs, I think everybody recognizes that drug pricing because of all these numerical drugs that have come out is a real challenge for the entire economy in terms of cost. But I think we're also seeing some chipping away of that. One thing that I would say from the policy perspective is I've always felt as though drug pricing in the U.S. is less a health care issue than it is a trade issue. And what I mean by that is that the rest of the Western world is benefiting from us subsidizing 100% plus of the global pharmaceutical research development. And so, what you're seeing is a very aggressive push on a part of the current administration to recognize that fact with most favored nation pricing and sort of trying to put pressure back on the pharmaceutical manufacturers to say, hey, you guys figure it out, right? It's a zero-sum game, and you're going to have to go back to Germany, France and Switzerland and get a little bit more, and we're going to we're going to take our share of the savings or some share the savings out.

So, Jill, how much responsibility falls on the industry to proactively simplify choices and educate the public.

A lot. But also, like we are the industry. It's not this other thing over there that needs to go and simplify. And I will say even with Aetna being part of CVS Health, we have a refreshed purpose that was recently introduced, which is to make health care simpler one individual, one family and one community at a time. So to have a Fortune 10 company saying that's a primary focus to bring simplicity to this environment. And it's not going to be like any one player has the ability to do it for the whole industry, not at all. There has to be a lot of work happening together, just to build off the point you were making, Chris, around the provider and the health insurer and kind of it's an AI arms race nobody is going to win that in the end, right? If you look at, hey, my algorithm is better than yours today on rev cycle management, oh, no, I'm going to find something in my payment integrity program. And so we're actually really trying to change the dynamic. We have focused on what providers think our NPS should look like, right? What do they actually think about how we work together. And that's coming from the top of the organization. So it's together that we can start to drive more simplicity. Building on the transparency points. It's cost transparency. I mean, I'm sure there are people in this room who have gone out to dinner and the special sounded really great. And you ordered the special. And then the check came and you were like, it wasn't twice as good as the thing that I was thinking about that was on the regular menu, but I didn't know how much it costs. I mean, that happens with health care every single day. So how can we chip away at that transparent pricing? But it's not just pricing. I mean we want really good quality of care, right? No one's going to say, well, I save $10, but I had crappy care, you want those to go together. So part of it is how can we use tools and insights to help consumers find high-quality, cost-effective care and not have to do a lot of work around it. So for example, if you have certain tools where a member can be searching in a digital app, and you can say, well, look, here are 3 providers we recommend for you not based on your ZIP code, but based on the fact that we know these things about you. We know that you only go to this particular system. We know that you like to go to a Spanish-speaking doctor. How do we -- we know that you're maybe a middle-aged woman with a knee-problem versus a high school sports industry, like injury, that matches up differently, right? So how can that get served up in a way that is easy and just kind of no one has to actually put all that information in. But still, again, I'm sure I wouldn't be the first person to say, people don't always trust what their health insurer tells them about where to go. So we did some consumer research and said, well, if we go through this process and we do this intelligent matching, and then we have a button that literally says, well, why, like why did you make this recommendation and list that out. That consumers actually then start to trust the data. Now in all fairness, they're still going to go ask their neighbor, hey, do you know Dr. so-and-so what do you think? But it's really one of the first times that we're starting to see that level of trust be reflected in consumer behavior because we're making it that easy to find the answers they're looking for.

So it's clear policy has a role, the industry has a role, but there's still some debate about whether health care control function like other consumer markets. Brad, I was wondering if information asymmetry and just the urgency of medical care when you needed. Are those unique barriers to the health care industry? Or is are there lessons that we can learn from other sectors?

Yes. Just before I answer that, just -- I think we're at this inflection point, right, with technology, generative AI. We see HealthEquity the way that it's changing the interactions that the consumers have simple things from just being able to, hey, I lost my card and being able to reorder a card in a human voice, simple interaction, being able to submit claims and have them auto substantiated and generated, it's really improving the consumer experience. But going to the question that you asked, I would first start by saying we have to recognize that in the world and in particular, in the United States, there has been asymmetric information for over a century. And I'm going to propose a couple of reasons for that. The first reason is that physicians have the power of the pen. They write orders. They write prescriptions and therefore, they dictate the therapy that patients are receiving. Now this has served patients really well for many, many, many years, right? And it's been a good thing. It keeps them from homegrown solutions, homespun solutions as well as it ensures that health care is really based on science-based decisions, and that's been a positive thing. The second thing is that the third-party payer system is really been designed much like life and auto to be able to aggregate risk and to really protect the individual from unexpected and high-cost events, or disease states, right? And that does also serve the consumer really well, right? But this model of the doctor-driven medicine as well as the third-party payer system, that has really led to unempowered and uninformed consumer. And that may have worked in an acute environment where it's difficult to self-manage the illness, things like maybe a complicated pregnancy, appendicitis, trauma and cancer and things of those -- of that nature. But an uninformed, unempowered consumer is a bad recipe when you're talking about other type of conditions, such as obesity or diabetes or maybe even elective kind of lifestyle therapies such as a knee replacement. And so we really believe that if we want to change kind of the non-acute I totally believe in the acute environment, the third party payer system as well as the doctor-driven medicine is beneficial, but we need to bring consumerism to the forefront. And the way to do that is to be able to include the financial incentive for people to make proper decisions.

I think we also have to give them information, right? Because clearly if you're going to go to ER and you need to go to the ER, you should go to the ER. But there's a decision that's made that is, do I need to? And there are as much as there are many necessary visits, they are just as not unnecessary visits. Now those are driven by a ton of thing, right, the financial component. Also just do you have access to the information you need to determine if that's your next best step. So I think it comes back to how are we going into that kind of natural, we have a plan sponsor who's actually so an employer, who said what we've had such trouble with over -- or unnecessary utilization of the ER, that they're starting to tier their ER benefit. So what does that mean? Well, I'm just -- this is illustrative. These are actual numbers, right? But for your first two visits, your cost share is $100. Your third and fourth visit, your cost share is $300. If you have a fifth or sixth visit, it's going to go up even more. And they're trying to draw attention to that decision-making process before you go. And by the way, if you get admitted, all of that gets -- like it doesn't count, right, doesn't count as a visit because it's appropriate use. So just some really interesting models to think about how can you intervene in a decision-making before you're at the point.

So AI has come up multiple times a discussion today. I was wondering, maybe you could just dig a little bit deeper into how your different companies are using air models to maybe unlock insights that could potentially help consumers make the right decisions. Maybe Jesse we can start with you.

Yes. Well, I think I'll talk about it in the context of this conversation right now. My opinion on this, I think what we're seeing is you got to go way upstream, way upstream to influence what's happening in that acute care moment. So -- and so at Oscar, we think about our product more like any consumer technology experience, not like a health insurance experience. And so you got to think about what's the best UX design, data principles to kind of engage people into the experience. How do you gamify it. Right now, we've recently launched a program called Oscar Unlocks, which gives people a custom avatar if they do certain things, right? It gives them a different call center experience. These are not expensive things for us to do. And that allows people to come back to the experience and so they can identify, well, maybe there's a cost differential, if I go to the ER again, maybe there's a -- oh, I can use my virtual urgent care benefits to tie into AI, we're also figuring out -- I think the -- there are a lot of -- there's a long list of very obvious back-office opportunities. I'm not going to spend time on those now because I think that we've probably heard about them. I think on the member and patient-facing side is where we're now looking. And so we recently launched a new application called Oswell, it's a chatbot. And really it's hooked into what we know about the member has access to their claims history, their drugs history, what doctors they go see, what's their demographic and so they can ask questions about, hey, is this ERs or is it not? It's plugged in to our virtual medical practice of it needs to have an instant escalation, it can. And so I think, again, if you look at this whole thing, I'll go back to my Tesla example, like Airbnb or Amazon, people -- I think people do want to access to information and data. I think it's incumbent upon the company to aggregate it, make it useful, so that when you have a need. I can go find out who's the right doctor, what kind of care be getting, what drug should be on? Is there a lower-cost drug? I mean these are all questions people may not even have [ where will ] to ask. And historically, they need to pick up the phone, we do hold, know to ask. I think AI creates opportunities to push information to consumers or just make it more easy any time of day, any day of the week to say, oh, you know what, I need to get a drug? Is this the right drug for me? Where should I get it? Are there alternatives? Should I go to the ER? Should I go to urgent care? Should I sleep it off? I mean that's the type of stuff that AI can do decently well already.

Jill?

I would just -- I agree. But no, I mean, because I do think that kind of what I was talking about with that matching component before too. It's like how do you use the information in the moments that matter and in an intelligent way that makes it super easy for the individual. And I think that's what some of these tools will enable us to do.

So at WEX, we use AI in a couple of ways. The most important and impactful for the purposes of this conversation is really, what are we doing with AI to help people move good decisions, okay? We have a benefit administration business. That's where people are shopping for their employee benefits for the coming year. And so that is focused on how do I make the right health plan choice among the 3 or 4 or 5 choices that some employers will give. There's a traditional plan. There's a couple of HSA qualified plans, et; cetera. What's the right decision for that individual. And it takes into consideration not only financial factors, but also risk tolerance factors because I think that's really important. We cannot lose sight of the fact that there's an emotional component to all of this, this entire conversation. I mean, we exist -- we all exist at the intersection of people's emotional health, their physical health and their financial health. It doesn't get much more challenging in that in terms of emotion. But with regard to the HSA piece of it is how much money should I be putting into my HSA. And we find that when people go through our HSA plan, they actually will increase their contributions by about 25%. That is very good for them. They're finding ways to put more money away because they're going to need that money at some point, whether it's this year, next year or in retirement. But I think what we believe is the most important and powerful AI development is our road map, we are working hard on the Agentic AI, and we will release a concierge. And so this goes back to this whole idea of transparency. We think about it on a continuing and there's transparency. There's navigation, which kind of sits next to transparency. And then actual care management, which we are not at our company can go into. But if you think about transparency moving into navigation, people do need their handheld. I said that we have to provide information to people. We also have to understand that these are emotions, and these are decisions that are very impactful to people and a lot of people are going to feel that they need to have their handheld. The first part of that handholding can be an AI agent. And if it's developed correctly, but we also, I think, have to recognize the limits of AI. And at some point, you're going to have to have the ability for a human to take over that navigation function.

Well, if the AI gets it wrong, it matters a lot more than booking your trip to Europe, right?

Absolutely. So I would just be parroting a lot of what was already said. I think Agentic AI is changing the way in which we deliver the experience at HealthEquity in very, very meaningful ways from kind of how people choose their benefits to how they use their benefits. And I think the really important factor here is kind of meeting the consumer where they're at. The consumer needs to be able to ask human-based questions be able to have that experience served up to them in an easy-to-understand fashion. And like I said, we're at this inflection point where technology actually allows us to be able to deliver on that promise now.

So one area where cost-conscious decisions would be especially challenging with specialty drugs. They are among the fastest-growing components of U.S. health care spending I was wondering, just from an insurance perspective, Jesse and Jill, are there innovations that could be used to help beneficiaries make more informed decisions around those specific class of drugs.

Look, I think the main thing is going to be fairly consistent with the conversation. It's better -- starts with better engagement upfront so that we can provide better education so we can help direct people to the thing that's in their best interest. And so again, we can use that. And that could be multimodality, I don't care they're calling me for that because this is an extensive interaction and are the more expensive and more impactful on the phone call a day for that. We could also serve it with AI with other chat tools, but I think having the information, packaging it up, serving recommendations. It all starts with somebody thinking, let me check what Oscar has to today, what Aetna has to say, that I think is actually the -- that, in some respect, is the biggest CASM because people want -- they'll go to Facebook before they go to Oscar, right? Or they'll go to their neighbor before they go to Aetna. And so you need to pull them in serve up information in a useful way so that you can drive a decision. I'd be curious to hear what you have to say on this.

Yes. I think when we look at specialty drugs, and to be clear on the medical side, so it crosses into that, but it is not all pharmacy. We have to look at a couple of different things. One is where there are substitutes, what's the actual product on the formulary that you have access to. And that is not about denying access to things. But if we look at last year, we removed HUMIRA from our formulary and replace it with biosimilar. We did it in a way that it was seamless to remember because it was through engaging with the physician. It was all highly automated, so they didn't have to create a lot of work. And the product is basically the same product, just the biosimilar version of it. We moved like 95% of the scripts in 1 month, and that was more than the entire industry moved in the whole year. So you can use formulary, but you have to obviously have the comparable solution but also available in things like the intensity of the solution, the vial sizes, all this kind of stuff that gets pretty specific to what a prescription might entail. Another component is where you can use network and benefit design. So network, like, where can you go for this service and benefit design what will get paid for if you go there. Now that's not common across all therapeutic areas. But if you think about where we've been going with gene therapy, like those are, generally speaking, intended to be one and done. They're incredibly expensive. And the frequency level is such that it's not like every provider on every corner has done these. So you actually want to go to an expert. And if it's a one and done, you're willing to perhaps even travel for that. So you can use benefit design to say these are the best people to go to at the best price with the best member responsibility. And the last thing that really drives a tremendous amount of cost in the specialty space, it's just site of care. So for example, KEYTRUDA is a drug that's been on -- like a cancer drug has been on the rise, there are multiple indications for it and continues to grow. If there first few administrations of KEYTRUDA is in a hospital setting and you have no adverse impacts, do you need the next 16 treatments to be in a hospital setting. Now in a certain circumstances somebody has other comorbidities, the answer might be yes. In a lot of cases, it's no. And so how do you facilitate that awareness, that transition where it makes sense to do so to help manage the specialty spend.

So we've covered a lot of ground before I open it up to questions from the audience. One last question for all of you. If you could enact one change to accelerate real health care consumers in over the next 5 years, what would that be? Jesse we will well just start with you and then go to the others.

Yes. I mean, I think for me, the answer would be ICRA, and I think that's how you expand the access to individualized, personalized products to a much broader group of people. And so you're not -- I don't need to buy a product that has a network for my colleagues in Texas and California, if I live here in New York. And I don't need to buy coverage for my colleagues, you need to have a certain level of care that I just don't need. I think ICRA to me right the forefront of this...

Maybe just defining what ICRA is?

Oh, ICRA. I always forget not everyone talks about ICRA everyday. ICRA...

Rolls of your...

Individual -- now I'm blanking on it. Individual Contribution Health Reimbursement Arrangement, which effectively means my employer can give me tax-free dollars to go buy an individual product. And so the premiums for products in the individual markets are often 20%, 30% lower cost than for employer products. And as -- you can have Oscars does recently launched a plan design called HelloMeno. It's a menopause design plan for people who want to have -- first all the benefits in that part of their life. You're going to have a diabetes care plan, which has first dollar benefits for their needs there. You can buy the product that works for you, it's lower cost. That, to me, would be the kind of biggest innovation.

Maybe to build on that, I would really focus on personalization. The World Economic Forum has about 3% of data that's in the health care system is actually effectively deployed. So when I say personalization, too, that it doesn't have to mean that we know thousand things about 1 person. It could be with the profile of a person you keep narrowing it down. And in order for -- to generate change in behavior at an individual level, they have to feel like it's relevant to them.

I'm going to go a little bit broader. And I'm going to come back to the first question that you asked, Daniel, which is because I think we're really here to talk as well about how do we control costs. And I think it's more holistic. And I'm actually going to pick up on some comments that Jesse's boss made yesterday on Squawk Box, you might have seen that interview. And there was a sort of a profound question, Dan, which was, okay, if you're going to put pressure on the system to hold down costs, what's going to happen to the margin, right? And this is a group of investors and business school students. So you'd be interested in that. And I want to kind of pick up on that and say from the perspective of the insurance layer, there needs to be more information that empowers consumers to make better decisions. So I love the ICRA idea, because it allows people to go out and shop for the insurance plan that makes the most sense for them. What will that do? That will then cascade down to insurers are going to have to get more intensely competitive in how they control costs because people do shop for value. And then that's going to put pressure back down on the delivery system and the delivery system is simply going to have to get more efficient. And if you put pressure that comes from the payer, which increasingly is going to be the consumer through the insurer and in some cases, directly to the provider because be ready for conversations down the road at some point to be between a provider and their patient about what am I going to pay for the service. It's going to force the delivery system to get a lot more efficient to protect its margin. And those who are really good at that are going to be the ones that survive and thrive and are going to find a way to preserve their margin. Because at the end of the day, you think about it from the perspective of the Affordable Care Act is now 12 years old. It did a lot to try to reform how we finance care, but it did nothing to reform the actual cost of delivering the care itself, and that pressure is going to have to come from the top down.

Yes. Building on what Chris said, how do you align incentives for the consumer to apply that pressure? And I think the way to do that is you've got to open the market for accounts that allow people to build a nest egg, a security blanket, an account like a health savings account, and we need to open that up for more Americans. The recent legislation did make that available to people on bronze plans, which is fantastic. We need to open that up so that every American can have a health savings account to bring that aligned incentive. I think what Jesse is talking about people getting into the plans that work best for them. So I guess my answer would be open up so that every American can have a financial account like a health savings account to save for medical and align those incentives so that people will apply pressure in the system to drive the change that is necessary.

Questions from the audience?

I'm the first. Okay.

Go ahead.

So [ Jacqueline ] [indiscernible], I come from the health, wealth and well-being on the employer side. So I love the panel. Thank you. When I think -- when I hear medical inflation, raising up and cost containment. And then I think there was a comment, for example, an employer that's adding additional tiers to get access to here. I want to shift a little bit. Reality is, even if you're employed, you cannot afford health care. And that has been just creating that beautiful snowball impact on I cannot afford medicine. I end up in ER. I'm being simplistic here. But have you seen something that's different that would truly look into root cause and prevention, something that's way more proactive than what we see our health care plans working today. In a way that you could create an inflammatory wake place. So that's my...

Maybe I'll kick it off. Thank you so much for the question. I have to imagine, given the context of this room that there are some folks who are following what's going on in the longevity space, whether that's Peter Attia, Mark Hyman or Function Health. And I see that -- I'm very interested in whether that space can impact what you've just described right? And now let's be clear. It's kind of like the fancy modern way of saying, let's actually do preventive care and like -- but we're only going to see this continued ballooning if we continue to treat it as you had said at the beginning, is like the health -- the sick system, not the how do you help people stay healthier. So I do think that one of the challenges in that space in general is when you say expanded diagnostic testing, like that can go off the rails pretty quickly. So it has to be, obviously, with intention, appropriate, et cetera, paired with consultation on what do I go do with this information paired with incentive to actually take action on what the consultation with the doctor led to. And if you bring all of that together, I do think that there's potential to start to shift.

There were a lot of hands for questions, I want to add one thing on this, which is the average term of someone's time with a health insurer is like, what, 18 months, 20 months, it's really short. And that payer has no incentive to invest in long-term wellness just because they're going to turn over to go to the next one. So I do think if we could find a way to keep somebody you have your Oscar plan, your Aetna plan or whatever for extended periods of time, those health insurance companies can invest in longer-looking wellness in preventive care, which today that whole economic model doesn't align for that.

Go ahead.

Well, thank you for the panel. So my recent CBS alarm and so one of the greatest benefit of the HSA is that the triple tax vantage investment opportunity, right? But across the board, we see barely 10% of the 40 million Americans investing in their HSAs. And at HealthEquity, it's about 7.8%. So some of your competitors like Fidelity, they have an investment first platform. I guess the question is more on how do you align your incentive premier business model to incentivize more people to become investors and their health to build wealth for their future?

Let me take that one to start, Brad.

Go ahead, Chris.

First of all, our incentives from a business perspective are actually quite aligned. So little transparency into the business model that Brad and I operate under. We typically, in most rate environments will make a bit more money on the deposits than we will on the investments. So you would expect that, that would be a perverse incentive to get people not to invest. But the other side of the coin is that the average consumer who has an investment account has 2.5 to 3x as much actually in deposits as the ASH consumer who doesn't. And the reason for that is and research -- really firm this is, people want to cover their deductible. $500 to $5,000 deductible. I want that in cash or cash-like instrument I don't want to take market risk on that. The reason why only 10% of people invest today is because if you look across the spectrum, over 2/3 of people who have an HSA are -- have an estimated hold income of less than $100,000. Now in our research, 60% of people say my HSA is an important part of my retirement planning, but only 10% of them invest. So there is an aspiration to get there, but we also have to realize that not all people can get there today. And in that sense, we're no different than the retirement community. I mean the retirement plan companies wring their hands over and over and over again over why aren't more people in a 401(k). And if they are, why aren't they contributing more? Why aren't they maxing? And all -- so this is not a new issue. But we do have ways of getting them there. It's speaking to them in the right language, it's educating them I mean it's giving them tools to understand how they can build financial wealth through their HSA.

Yes. I don't have much to add to that other than we're focused on helping people better save, spend and invest. And you have to remember, as Chris so well stated that the minority of people are living paycheck to paycheck. And they need to be able to cover their medical expenses. And so of the $55 billion that go into an HSA every year, roughly about $42 billion of that is being spent, right? And it's being spent because people need to cover their health care expenses. And so investment options are there. We want to meet the member where they're at. Generative AI and technology is allowing us to be able to do that more and more effectively each and every day. But we have to remember that, first and foremost, people need to receive the care. And the good news is they are receiving their care because they have money in the account.

Henry [indiscernible] again. This a question for Jill Dailey from Aetna. Let's imagine that Sam Altman in the next 24 months and has Nate Gross over their build basically chatGPT MD, and it costs about, I don't know, $10 a month out of the $20 subscription and your membership actually wants access to this. You could argue, you have to go through the FDA, get it approved as a digital therapeutic. We're going to build our own sort of like app for benefits or something. But here's something, and then let's imagine just for sake of argument, there's a cohort study showing it actually prevents emergency room visits, almost like a triage tool that you would get. Is there a mechanism that even for Aetna, administering self-insured employer plans to even pay for something like that as consumers start to shift their preferences towards AI-driven tools?

I mean I don't think there is in today's model, but it's absolutely something that everyone should be looking at. I will say I'm not sure that, that's the organization that I would say we -- like I want to know what's feeding the LLM, right? Like what's going into the answers that are given? Because realistically, there's probably like one out of every two people here has used ChatGPT or a like solution to ask a medical question, right? At some point, you may not have acted on the answer, but that is not -- like that's pulling data from a lot of different places and some are validated and some are not at this stage. But to your point, I do expect that that's going to continue to get better and better and better. And if it's where human behavior is, then we have to figure out how that connects. So for example, CBS Enterprise has three geographic locations where we're testing an AI-first provider rate. And that's -- we can't see it it's in Florida, Texas and Colorado. So unless somebody is going there, sorry. But that's the kind of test and learn. We've got to see how do things work, how to consume, and are they accurate? Because going back to the earlier point, you hear a lot more about the health outcome than you do if you book the wrong hotel.

I'm 85 year old. So I probably consume more health care than the rest of the room. But there are three -- you mentioned virtual health care. First of all, urgent care. And I recently had an opportunity to use virtual urgent care. I didn't even know it existed. And then, of course, during the shutdown, they took it away, but now it's back. I think it's an absolutely wonderful program. But I don't think too many people know about it. The second thing is I have an Apple Watch. And I think everybody who buys a phone would to be given a watch for free because together, it's a wonderful health care device. So I'm told by the doctors -- my doctors. And then the third thing is the SilverSneakers program, which anybody over the age of 60 can participate in. And what can you do about getting more people to do it? Because I tell everybody about it, people goes in one or not the other. Nobody does anything. What can we do to get more consumers to do what I do.

Look, I think it'll sound like a bit of a broken record. I think you have to stop thinking about health insurance as its own beast and think about it as any other consumer product. Oscar has been giving away free virtual urgent care since we launched our first product in 2014, that's been a part of the offering. It's fully integrated with the experience. And in super convenient, as you mentioned, I use it all the time. I think it's both a great cost-saving tool. It can be used for ER divergence. It could be for convenience, it kind of runs the gamut. Not everyone uses it. And I see this less about -- we don't want to educate people on virtual urgent care. That is so narrow. It's about driving awareness that there is value. If you have a health care need, you open up Oscar app, you open up your Aetna app. There are things in there that are useful. It could be a silver sneakers program anything else. But go hire some people who are designing Airbnb and Spotify and all these like highly consumer-oriented products, have them built for health care and you'll get better usability. And the usability will result in people not understanding how to use these kind of capabilities.

We have time for one more question.

She's been waiting forever.

[ Sunny Win ], I'm a strategy transformation consultant. My question is really linking back to what you were talking about personalization. So that's what consumers are asking for. We're interesting consumer to pick with the right program plan for them. But now as you're going on this journey, what are you doing to measuring tracking on the actual house outcome after they pick a specific plan for them. And then the long-term financial impact when you think about 5, 10 years from now, what's the total cost?

Yes. So it's a great question because at the end of the day, it is that mix of quality and cost. And so I started to talk a little bit earlier about kind of that matching thing, right? And so we know that if someone goes to a high-quality, cost-effective clinician that from a PCP level, they save a couple hundred bucks a year. If it's an ortho, it's $1,000, right? So there's a delta that we match and monitor and say, okay, well, if that increases, then there's more savings for the individual as well as who member is paying for their coverage. So I think, being able to track that. And we spent a lot of time as an industry talking about like what's the solution for diabetes? What's the solution for weight management? You name your chronic condition and a lot less time focused on the very question of how do you engage the right people in those solutions. And I think that's why we're seeing point solution fatigue in the industry overall. We're seeing consolidation. It's not because the solutions I'm being very generic here, right, but aren't good. It's that if each time you use it, you save $200 and 5 people in a population use it, that's not material enough for an employer to cover that. So it's interesting times.

I saw a lot of hands up, please connect to the panelists.

I think we can do one more, Daniel, if there's a final question.

Okay. Go ahead.

Thank you, everyone. I heard a lot of good interesting ideas, very focused on the consumer really, really, I think, driving decisions once they're diagnosed with something. I think that's definitely something that needs to continue to happen. I guess my question is more along the lines of what are we thinking about with respect to the consumer on the preventative health side where we not get more traction there from a cost standpoint. And then two, what are we doing from a payer perspective to drive, I guess, better decision-making and pushing some of that on the provider and how the provider gets reimbursed to make -- to influence the provider in those decisions.

I'll take the first part of that question. On the ounce of prevention, we do see a lot of employers now using incentives to drive people to get their preventive services to close their gaps in care to use telemedicine to make right decisions, mail order for pharmacy, things of that nature that really do kind of bring down cost, but also are an ounce of prevention. And we're seeing more and more of that as people have a financial account where there's the incentive aligned where the employer can actually put money in and fund. Now the challenge is, is that we don't have that alignment broadly enough in the market, right? So we need to make these types of accounts the gentleman, the 85, I believe, congratulations, 85 years old. Unfortunately, there isn't that financial account to incentivize people that are in Medicare to take advantage of the ounce of prevention. So I think there's a lot of opportunity there as we bring alignment with incentives.

And I would say the wellness market is a $500 billion market. It's growing at 4% to 5% a year. What I think is fascinating about that spend is that the younger population in that mix is like -- and I think it's like an up to 35 age range is spending more than their percent representation of the population. So I'm trying to make a complex things sound really harder, but it really just people who are of a younger mindset and age are actually spending more on wellness when you look at the data. So at least that's a glimmer of hope looking ahead.

We'll take a quick 15-minute break and be back here for the third funnel on aging in place. Thank you so much for attending.