The Other Side on Syam Adusumilli

The Bundle Is the Problem

Sun, 01 Mar 2026 00:00:00 +0000

The prevailing view in small group health benefits holds that the bundled insurance product, combining network access, pharmacy benefits, and catastrophic protection into a single monthly premium, exists because these three functions are interdependent. Separate them and you lose the risk pooling that makes coverage affordable for sick people. Separate them and you lose the administrative efficiency that makes the product manageable for a 20-person employer. The bundle is not a design choice. It is a structural requirement.

Executive Summary: The Bundle Is the Problem

Sun, 01 Mar 2026 00:00:00 +0000

TOS.01 — The Other Side
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The bundled small group health plan combines three economically distinct transactions under one contractual wrapper: access to a negotiated provider network, access to negotiated prescription drug pricing, and catastrophic financial protection. Only the third is actual insurance. The first two are purchasing functions, and purchasing functions do not require an insurance structure to work.

Community Rating Failed

Sun, 01 Mar 2026 00:00:00 +0000

The prevailing view frames level funded health plans in the small group market as a form of regulatory arbitrage. Healthy small employers use ERISA preemption to escape community rating, cherry-pick low-risk populations into self-funded arrangements, and leave the sick and expensive behind in the community-rated pool. The growth of level funded is, on this account, a story of market gaming that undermines a public policy designed to make health coverage accessible to small employers with unhealthy employees.

Executive Summary: Community Rating Failed

Sun, 01 Mar 2026 00:00:00 +0000

TOS.02 — The Other Side
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Community rating is not a victim of level funded’s growth. It is the cause of it. The ACA’s adjusted community rating for the small group market, effective January 1, 2014, prohibited premium variation based on health status, gender, or claims history. The design intent was to cross-subsidize sick groups through the excess premiums of healthy ones. The mechanism has a structural weakness that Rothschild and Stiglitz identified in 1976: pooling heterogeneous risks in a community-rated market is not a stable equilibrium when participation is voluntary and a cheaper alternative exists for lower-risk groups. They exit. The pool sickens. Premiums rise. More exit.

Coverage as Retention: The Case for Variable Employer Contribution

Sun, 01 Mar 2026 00:00:00 +0000

The prevailing norm in employer-sponsored health benefits holds that coverage should be uniform across the workforce. The same plan, offered on the same terms, available to all eligible employees. Non-discrimination rules, ACA provisions, and industry convention all reinforce this posture. Varying the employer’s health benefit contribution based on an employee’s value, tenure, role, or retention priority is treated as legally suspect, ethically questionable, and operationally complicated.

This article argues that the uniformity norm serves the insurance product architecture, not the employer or the employee. Every other component of employee compensation, salary, bonus, equity, paid leave, parking benefits, and professional development budgets, varies by employee value. Health coverage is the one exception where the benefits industry insists on uniformity, and that insistence rests on a legal framework that is far narrower than commonly understood and on a cultural norm that the employer-as-plan-sponsor model has never been required to maintain.

Executive Summary: Coverage as Retention: The Case for Variable Employer Contribution

Sun, 01 Mar 2026 00:00:00 +0000

TOS.03 — The Other Side
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Every component of employee compensation varies by employee value: salary, bonus, equity, paid leave, professional development budgets. Health coverage is the one exception where the benefits industry insists on uniformity. That insistence rests on a legal framework far narrower than commonly understood and on a cultural norm the employer-as-plan-sponsor model has never been required to maintain.

Broker E&O Accountability Is Guild Protection

Sun, 01 Mar 2026 00:00:00 +0000

The prevailing view holds that broker errors and omissions liability, fiduciary standards, and compliance oversight exist to protect employers from receiving bad advice on health coverage decisions. The complexity of level funded structures, ICHRA mechanics, and hybrid benefit architectures makes broker accountability more important, not less. The argument for the accountability framework is paternalistic in form and protective in intent: employers are not equipped to evaluate complex coverage options without a licensed intermediary, and that intermediary should bear professional consequence for failures in the advisory relationship.

Executive Summary: Broker E&O Accountability Is Guild Protection

Sun, 01 Mar 2026 00:00:00 +0000

TOS.04 — The Other Side
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The broker accountability framework in the small group health benefits market costs more than the harm it prevents. It functions primarily as guild protection for the brokerage industry: raising barriers to entry, adding transaction costs passed invisibly to employers, and maintaining the broker’s intermediary position in market segments where the underlying rationale for that position is weakening.

The TPA Is the Plan

Sun, 01 Mar 2026 00:00:00 +0000

The legal framework governing self-funded and level funded health plans rests on a specific fiction: the employer is the plan sponsor. The employer establishes the plan, maintains the plan document, and bears fiduciary responsibility for plan administration. The third-party administrator is a service provider. The TPA executes; the employer decides.

In operational reality, the relationship runs the other direction. For the typical small employer operating a level funded plan, the TPA writes or substantially controls the plan document, selects or strongly recommends the provider network, sets adjudication criteria, manages prior authorization, processes every claim, handles every appeal, manages the stop loss relationship, and produces the renewal analysis that determines whether the employer continues with the current structure or changes it. The employer’s active decision-making typically consists of selecting how much to contribute and signing where the broker directs. The legal fiction that the employer sponsors and the TPA administers is increasingly disconnected from how these plans actually operate. That gap has fiduciary implications that the industry avoids addressing directly.

Executive Summary: The TPA Is the Plan

Sun, 01 Mar 2026 00:00:00 +0000

TOS.05 — The Other Side
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The legal framework governing self-funded and level funded health plans rests on a specific fiction: the employer is the plan sponsor. The employer establishes the plan, maintains the plan document, and bears fiduciary responsibility for plan administration. The TPA executes. In operational reality, the relationship runs the other direction.

For the typical small employer operating a level funded plan, the TPA writes or substantially controls the plan document, selects or strongly recommends the provider network, sets adjudication criteria, manages prior authorization, processes every claim, handles every appeal, manages the stop loss relationship, and produces the renewal analysis that determines whether the employer continues with the current structure. The employer’s active decision-making typically consists of selecting how much to contribute and signing where the broker directs. The employer’s meaningful choices are bounded by three decisions: which TPA to use, how much to contribute, and whether to renew.

Stop Loss Carriers Are the Actual Architects of Level Funded Plan Design

Sun, 01 Mar 2026 00:00:00 +0000

The standard description of a level funded plan assigns roles as follows: the employer sponsors and funds the plan, the TPA designs and administers it, and the stop loss carrier provides catastrophic reinsurance. The carrier is downstream. It prices risk that others have assembled. The plan exists first; the carrier prices it second.

This article argues the allocation runs backward. Stop loss carriers do not price risk that others have assembled. They define what is insurable at what cost, and the TPA and employer assemble plan design within that definition. Attachment points, lasers, excluded conditions, aggregate corridor specifications, and contract renewal terms establish the boundaries of what the plan can do. Everything that happens inside those boundaries, the network selection, the benefit design, the member experience, the employer’s total cost exposure, operates within the space the carrier allows. The industry describes this as the employer choosing a plan with stop loss protection. The more accurate description is the stop loss carrier deciding what kind of plan is insurable, and the employer choosing within that decision.

Executive Summary: Stop Loss Carriers Are the Actual Architects of Level Funded Plan Design

Sun, 01 Mar 2026 00:00:00 +0000

TOS.06 — The Other Side
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Stop loss carriers do not price risk that others have assembled. They define what is insurable at what cost, and the TPA and employer assemble plan design within that definition. Attachment points, lasers, excluded conditions, aggregate corridor specifications, and contract renewal terms establish the boundaries of what the plan can do. The industry describes this as the employer choosing a plan with stop loss protection. The more accurate description: the stop loss carrier decides what kind of plan is insurable, and the employer chooses within that decision.

AI Does Not Assist Brokers. It Replaces the Function They Perform for Small Groups.

Sun, 01 Mar 2026 00:00:00 +0000

The prevailing industry position on artificial intelligence in health benefits is that AI will make brokers better. They will analyze more data, serve more clients, spot cost anomalies earlier, and provide richer recommendations. The broker’s core value, trusted advisor to an employer navigating a complex decision, will be enhanced by tools that handle the rote work while the broker handles the relationship. This is the enhancement thesis, and it is comfortable because it tells everyone their role is secure.

Executive Summary: AI Does Not Assist Brokers. It Replaces the Function They Perform for Small Groups.

Sun, 01 Mar 2026 00:00:00 +0000

TOS.07 — The Other Side
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For the 1-to-50 employer market, the broker’s functional role is not advisory in any meaningful sense. It is a structured pattern-matching problem with defined inputs, constrained options, and measurable outputs. Assess the group’s census and geography. Match those characteristics to available carriers and products. Generate quotes. Compare them on standardized criteria. Recommend one. Manage enrollment. Repeat annually. AI does not enhance that process. AI performs it. The timeline for displacement in the small group market is not a decade. It is five to seven years from the current state of the technology.

The Convergence: ICHRA, Level Funded, and the Contributory Platform That Replaces Both

Sun, 01 Mar 2026 00:00:00 +0000

The prevailing view holds that ICHRA and level funded are two distinct products serving distinct employer needs. The industry places them in separate boxes: ICHRA is a defined contribution mechanism through which employers reimburse employees for individual market premiums; level funded is a self-insurance arrangement in which the employer funds claims with stop loss protection against catastrophic exposure. The employer who wants cost predictability and group plan structure goes level funded. The employer who wants to exit group plan management entirely and send employees to the marketplace goes ICHRA. Different employers, different circumstances, different products. Market segmentation theory tidies the question into a chart.

Executive Summary: The Convergence: ICHRA, Level Funded, and the Contributory Platform That Replaces Both

Sun, 01 Mar 2026 00:00:00 +0000

TOS.08 — The Other Side
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ICHRA and level funded are not two points in a stable equilibrium. They are two evolutionary paths converging toward the same endpoint: an employer-funded contributory platform where the employer sets a defined contribution, the employee assembles coverage from a menu, and software manages eligibility, substantiation, and compliance. What emerges from that convergence will render the TPA, the group carrier, and the broker as currently configured structurally redundant for a meaningful portion of the 1-to-50 market.

Below 10 Lives Cannot Be Insured Through Any Group Mechanism

Sun, 01 Mar 2026 00:00:00 +0000

The prevailing view in the small group benefits industry is that level funded and other small group products can serve employers with 1 to 10 employees, that the model works for these groups with appropriate product adjustments, and that refining the product will expand viable coverage downward into the micro-employer segment. The industry frames its limitations in terms of product sophistication: better underwriting, more carrier appetite, expanded stop loss capacity, and the market will reach groups of 5 or 3 or even 2 employees.

Executive Summary: Below 10 Lives Cannot Be Insured Through Any Group Mechanism

Sun, 01 Mar 2026 00:00:00 +0000

TOS.09 — The Other Side
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Below a threshold that actuarial science places somewhere in the range of 25 to 50 lives for even minimal statistical credibility, group coverage is not a product refinement problem. It is an actuarial impossibility disguised as a product problem. The products sold to groups of 2 to 10 employees are not group insurance in any meaningful sense. They are annual financial wagers dressed in insurance language, with stop loss carriers as the house and employers as players who do not know the odds are incalculable at the group size they represent.

Consumer Protection Has Become Consumer Imprisonment

Sun, 01 Mar 2026 00:00:00 +0000

The prevailing view in health policy is that the disclosure requirements, plan document mandates, and compliance obligations attached to employer-sponsored health coverage protect employees from inadequate or misleading benefits. The Summary Plan Description protects the employee who needs to understand what the plan covers. The Summary of Benefits and Coverage protects the employee who needs to compare options. The mental health parity compliance documentation protects the employee who needs behavioral health access. The gag clause attestation protects the employee who would otherwise be blocked from seeing their own claim data. More transparency produces better-informed employees. More regulation produces better outcomes. This is the received view of the compliance apparatus.

Executive Summary: Consumer Protection Has Become Consumer Imprisonment

Sun, 01 Mar 2026 00:00:00 +0000

TOS.10 — The Other Side
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The compliance apparatus attached to employer-sponsored health coverage has crossed the threshold from protective to restrictive. It now does more to prevent employers from offering simpler, cheaper, and more transparent coverage arrangements than it does to protect employees from bad coverage. The apparatus was designed to protect employees from powerful carriers and plan sponsors with information advantages. It has become a system that protects the entities administering it, by creating barriers to entry for simpler alternatives and generating demand for compliance services that would disappear if the coverage arrangement were genuinely simple.

The Specialty Drug Pipeline Will Break Small Group Stop Loss Pricing Within Five Years

Sun, 01 Mar 2026 00:00:00 +0000

The prevailing view in the stop loss market is that specialty drug cost pressure is manageable. Carriers have tools: attachment point increases, laser provisions at renewal, specialty drug carve-out policies, and premium rate adjustments. The market has absorbed cost shocks before. HIV protease inhibitors in the 1990s and hepatitis C treatments in the mid-2010s arrived with prices that seemed impossible and were absorbed. The market adapts. Stop loss carriers are sophisticated actuarial businesses. The specialty drug pipeline is a known risk, and known risks get priced.

Executive Summary: The Specialty Drug Pipeline Will Break Small Group Stop Loss Pricing Within Five Years

Sun, 01 Mar 2026 00:00:00 +0000

TOS.11 — The Other Side
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The specialty drug pipeline of 2024 through 2030 is structurally different from prior drug cost shocks in ways that disrupt the repricing logic. The pipeline is not producing one or two drugs at extraordinary cost; it is producing dozens of therapies simultaneously, each capable of generating claims that exceed the annual specific stop loss attachment points of small group plans, targeting an expanding range of conditions. The actuarial assumption that carriers can price against this risk requires a predictable distribution of who will need these therapies and when. That distribution, across groups of 5 to 25 employees, is not calculable. Carriers will not absorb the cost. They will exit the smallest market segments, or reprice to levels that render level funded economically nonviable for groups under 15 lives. The timeline is five years, measured from when the approvals of 2023 through 2025 translate into covered claims for small group plans.

Health Benefits Are Not Health Insurance: The Case for Non-Insurance Employer Health Investment

Sun, 01 Mar 2026 00:00:00 +0000

The prevailing view holds that employer health benefits and employer-sponsored health insurance are synonymous. The benefit is the plan. The plan is the product. A 15-person employer who offers a level funded plan has a health benefit. A 15-person employer who does not offer a group health plan, regardless of what else they offer, does not. This equation is so embedded in the regulatory and benefits architecture that most practitioners do not notice it as an assumption. It reads as a fact.

Executive Summary: Health Benefits Are Not Health Insurance: The Case for Non-Insurance Employer Health Investment

Sun, 01 Mar 2026 00:00:00 +0000

TOS.12 — The Other Side
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A 15-person employer who offers a level funded plan with a $2,575 deductible has purchased something that most of their employees will not use for the medical needs they actually have. For an employee earning $45,000 per year, that deductible is 5.7 percent of gross income before a dollar of insurance coverage activates for non-preventive care. The Commonwealth Fund’s 2024 State of Health Insurance Coverage survey found that nearly one in four continuously insured adults were underinsured, and that 57 percent of underinsured adults avoided needed care because of cost. An Imagine360 survey in 2024 found that 38 percent of adults with health insurance delayed or skipped care due to cost, a 41 percent increase over the prior year. The employer has purchased coverage the employee cannot afford to use.

The Case for the Current System

Sun, 01 Mar 2026 00:00:00 +0000

The eleven counter-theses and the synthesis make a sustained argument that the small group health benefits architecture is failing. The argument is grounded in evidence. The evidence is real. But evidence for failure is not automatically evidence that the available alternative is better. The strongest case for the current system is not that it works well. It is that the replacement described by this collection does not yet exist at scale, that the history of coverage disruption is not encouraging, and that the entities, incentives, and institutional knowledge embedded in the current architecture represent an operational capacity that is easier to underestimate than to replace.

Executive Summary: The Case for the Current System

Sun, 01 Mar 2026 00:00:00 +0000

TOS.C1 — The Other Side
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The strongest case for the current system is not that it works well. It is that the replacement described by this collection does not yet exist at scale and that 164 million Americans currently covered by employer-sponsored insurance, per the Census Bureau’s 2024 Current Population Survey, depend on a system whose failures do not make it safe to dismantle before the alternative is operationally ready.

The Employer's Three Objectives

Sun, 01 Mar 2026 00:00:00 +0000

The Level Funded Plans Series documents how the small group health benefits system works. The mechanics of the level funded architecture. The stop loss underwriting process. The TPA operational stack. The regulatory patchwork across states. The employer segments most likely to move from fully insured to self-funded. The geographic variation that makes level funded viable in Texas and legally constrained in New York. The cost drivers accelerating across a drug pipeline that stop loss actuaries are only beginning to price. Sixteen series, approximately 140 pieces, organized by how the system operates. The system is complex. The series treats it with that complexity.

Executive Summary: The Employer's Three Objectives

Sun, 01 Mar 2026 00:00:00 +0000

TOS.PRE — The Other Side
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The Other Side Collection measures the small group health benefits architecture against three objectives every employer actually holds: do not put the company at risk, do right by the employee, and make it simple and honest. These are not compliance targets. They are the conversation a 15-person construction firm owner actually has with themselves before signing a benefits contract. The average annual family premium reached $25,572 in 2024, and private employer plans paid 254 percent of Medicare rates for inpatient services that same year. The current architecture serves the first objective partially and the second and third poorly. Each article in the collection takes one component of that architecture and tests it against all three. Where the component passes, the article says so. Where it fails, the article follows the implications.

The Direct Compact: What Emerges When the Current Architecture Falls

Sun, 01 Mar 2026 00:00:00 +0000

The twelve articles in this collection do not make twelve separate arguments. They make one argument from twelve angles. The bundled insurance product is the wrong architecture for the 1-to-50 employer market (TOS.01). Community rating accelerated the exit of healthy groups from that market (TOS.02). The uniform contribution norm misrepresents the employer’s actual retention priorities (TOS.03). The broker accountability framework protects brokers more reliably than it protects employers (TOS.04). The TPA exercises de facto plan sponsor authority without bearing the fiduciary consequences (TOS.05). Stop loss carriers determine what is insurable and therefore what the plan can cover, making them the actual architects of plan design (TOS.06). AI is approaching functional replacement of what the small group broker actually does (TOS.07). ICHRA and level funded are converging toward a contributory platform that renders both current products intermediate steps rather than endpoints (TOS.08). Groups below ten lives cannot be insured through any group mechanism in any actuarially meaningful sense (TOS.09). The consumer protection apparatus has become a barrier to simpler arrangements rather than a guarantee of better ones (TOS.10). The specialty drug pipeline is breaking stop loss pricing for the smallest employer segments on a five-year horizon (TOS.11). The most effective health investment a small employer can make for a low-wage workforce may not be insurance at all (TOS.12).

Executive Summary: The Direct Compact: What Emerges When the Current Architecture Falls

Sun, 01 Mar 2026 00:00:00 +0000

TOS.SYN — The Other Side
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The twelve articles in this collection make one argument from twelve angles. The bundled insurance product is the wrong architecture for the 1-to-50 employer market. Community rating accelerated the exit of healthy groups from that market. The uniform contribution norm misrepresents the employer’s actual retention priorities. The broker accountability framework protects brokers more reliably than it protects employers. The TPA exercises de facto plan sponsor authority without bearing the fiduciary consequences. Stop loss carriers determine what is insurable and are therefore the actual architects of plan design. AI is approaching functional replacement of what the small group broker actually does. ICHRA and level funded are converging toward a contributory platform that renders both current products intermediate steps. Groups below ten lives cannot be insured through any group mechanism. The consumer protection apparatus has become a barrier to simpler arrangements. The specialty drug pipeline is breaking stop loss pricing for the smallest employer segments on a five-year horizon. The most effective health investment a small employer can make for a low-wage workforce may not be insurance at all.

The Other Side on Syam Adusumilli

The Bundle Is the Problem

Executive Summary: The Bundle Is the Problem

TOS.01 — The Other Side #

Community Rating Failed

Executive Summary: Community Rating Failed

TOS.02 — The Other Side #

Coverage as Retention: The Case for Variable Employer Contribution

Executive Summary: Coverage as Retention: The Case for Variable Employer Contribution

TOS.03 — The Other Side #

Broker E&O Accountability Is Guild Protection

Executive Summary: Broker E&O Accountability Is Guild Protection

TOS.04 — The Other Side #

The TPA Is the Plan

Executive Summary: The TPA Is the Plan

TOS.05 — The Other Side #

Stop Loss Carriers Are the Actual Architects of Level Funded Plan Design

Executive Summary: Stop Loss Carriers Are the Actual Architects of Level Funded Plan Design

TOS.06 — The Other Side #

AI Does Not Assist Brokers. It Replaces the Function They Perform for Small Groups.

Executive Summary: AI Does Not Assist Brokers. It Replaces the Function They Perform for Small Groups.

TOS.07 — The Other Side #

The Convergence: ICHRA, Level Funded, and the Contributory Platform That Replaces Both

Executive Summary: The Convergence: ICHRA, Level Funded, and the Contributory Platform That Replaces Both

TOS.08 — The Other Side #

Below 10 Lives Cannot Be Insured Through Any Group Mechanism

Executive Summary: Below 10 Lives Cannot Be Insured Through Any Group Mechanism

TOS.09 — The Other Side #

Consumer Protection Has Become Consumer Imprisonment

Executive Summary: Consumer Protection Has Become Consumer Imprisonment

TOS.10 — The Other Side #

The Specialty Drug Pipeline Will Break Small Group Stop Loss Pricing Within Five Years

Executive Summary: The Specialty Drug Pipeline Will Break Small Group Stop Loss Pricing Within Five Years

TOS.11 — The Other Side #

Health Benefits Are Not Health Insurance: The Case for Non-Insurance Employer Health Investment

Executive Summary: Health Benefits Are Not Health Insurance: The Case for Non-Insurance Employer Health Investment

TOS.12 — The Other Side #

The Case for the Current System

Executive Summary: The Case for the Current System

TOS.C1 — The Other Side #

The Employer's Three Objectives

Executive Summary: The Employer's Three Objectives

TOS.PRE — The Other Side #

The Direct Compact: What Emerges When the Current Architecture Falls

Executive Summary: The Direct Compact: What Emerges When the Current Architecture Falls

TOS.SYN — The Other Side #

TOS.01 — The Other Side
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TOS.02 — The Other Side
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TOS.03 — The Other Side
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TOS.04 — The Other Side
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TOS.05 — The Other Side
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TOS.06 — The Other Side
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TOS.07 — The Other Side
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TOS.08 — The Other Side
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TOS.09 — The Other Side
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TOS.10 — The Other Side
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TOS.11 — The Other Side
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TOS.12 — The Other Side
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TOS.C1 — The Other Side
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TOS.PRE — The Other Side
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TOS.SYN — The Other Side
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