The conventional world of health insurance brokers – redefined by ACA


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“Commissions are either low or gone!”

“Healthcare.gov – Like it or not, you have to deal with it.”

“Plan choices, Private Exchanges, Benefits Administration, don’t know what else we will have to learn and do.”

These are some of the statements that you get to hear from health insurance brokers now days. The Affordable Care Act, by bringing in Federal and State governments to the center of the healthcare debate, has totally changed the landscape of health insurance distribution. And with it, come myriad changes as to how employers, individuals and brokers deal with it.

Let’s focus on brokers today.

Right from the CEO of Healthcare.gov, it has been reiterated time and again that brokers are an integral part of the post ACA world.

But, how do brokers need to mold and change in order to take advantage of the opportunities at hand in this new world?

  1. Move from being a sales agent to a benefits advisor – Healthcare has always held a top slot among government, politics and economy. Healthcare consumption is inevitable. In these new times of higher transparency, newer technology, better consolidation and decision making choices moving more into the hands of end consumers, brokers do not necessarily have to play the role of selling more, but of being a confidant, of being someone who can help a consumer move through choices, compliance and legislative requirements, the myriad intricacies, the new healthcare landscape has to offer. Sales are there to happen, and will happen more. But, are you prepared to service your consumers before you expect to sell?
  2. Expand into new product lines – Besides medical insurance, there are other products individuals and employers seek in order to provide a wholesome benefits experience. Voluntary products are popular choices and with them, come opportunities to expand and grow your business. Private Exchanges are stocking these on their shelves to sell alongside medical insurance products. And, especially with choice moving into consumers’ hands, these help round out and provide a better benefits experience. 
  3. Expand into third party exchanges – Talking about private exchanges, there are numerous avenues of product distribution available now. The public exchanges, several private exchanges, each with its own niche. Similar to health plans, brokers need to evaluate the choices available to their target markets and adhere with some that they expect to make the best impact for their customers with. Again, all this is overwhelming for individuals or employers and hence, they seek broker expertise to guide them to the right choices that aligns with their needs. With these exchanges also comes the need to understand benefits administration. The role of a broker no longer ends with completing a sale. It further continues with being there to guide their clients through the use of technology, being there to help answer their compliance and administrative questions and ensuring that they have a rewarding benefits experience throughout the year until next time.
  4. Embrace Technology – The new age healthcare world is technology driven. Its time brokers get comfortable with it, learn how to leverage it and use it to their advantage. Digital storefronts are a reality of the post ACA world. With exchanges coming out, consumers have learnt to expect to see their brokers on the web. Though in person interactions and telephonic conversations are important, providing self-service mechanisms to their clients who are very savvy now days, becomes as important. Consumers are connected and expect to reach their brokers any time, any day, however they wish. Additionally, it provides brokers the opportunity to grow bigger, faster.

Image Courtesy of FreeDigitalPhotos.net

The new kid on the block – The Anthem-Cigna combined company


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Move over, Aetna-Humana.

On July 25th, 2015, Anthem & Cigna, the nation’s second and fourth largest insurers by enrollment and the second and fifth largest by revenue, have announced a $54.2 billion merger, now the largest in the history of Health Insurance. Again, a part cash and part stock deal, Anthem is to pay $188 per Cigna share, a 38.4% premium over Cigna’s share price as on May 28th, 2015. $103.40 is to be paid in cash and 0.5152 shares of Anthem stock are to be exchanged per Cigna share.

Similar to the Aetna-Humana merger announced about 3 weeks ago, this deal is targeted to close in the second half of 2016.

Anthem will own 76% of the combined company while Cigna will own 33%. Anthem CEO, Joseph Swedish will be the new Chairman and CEO of the combined company while Cigna CEO, David Cordani will be its President and COO.

The combined company is expected to have 53 million medical members – nearly 1 in every 5 insured Americans with annual revenue of $115 billion. This would make it the largest U.S. health insurer by membership, closely trailed by UnitedHealth Group, with 46 million members.

With Aetna-Humana’s combined company poised to serve 33 million members, health insurers have consolidated from being the top 5 to top 3.

Historically, Anthem has been a company created through acquisitions, which grew mostly by buying Blue Cross-Blue Shield plans in various states. One of the prized acquisitions of Anthem came in the form of Wellpoint Health Networks of California in 2004. Amerigroup, a Medicaid plan in 19 states was its most recent acquisition in 2012. Anthem is the biggest member of the Blue Cross and Blue Shield Association, which has about 36 independent insurers that collectively insure 106 million members. Anthem serves members in 26 states.

Anthem dominates the employer based insurance markets in 10 of the 14 Blue states. Anthem has about 39 million medical members of which 61% are in the self insured market and 15% in Medicaid. Group business is about 12% and Medicare Advantage, just about 1%.

Blue Cross member companies do not compete with one another, but Cigna does. However, Anthem has confirmed that the combined company will remain Blue.

Cigna operates in U.S. health, life and disability markets and has an international presence in 29 countries, primarily through expat employer benefits. Cigna has 15 million medical members. About 80% of its business is in the self-insured market. Besides employers, Cigna serves individuals and Medicare Advantage customers. Cigna also has 24 million behavioral health consumers, 14 million dental care members, 8 million pharmacy benefit plan members and 1.5 million Medicare Part D pharmacy customers.

Anthem has a major presence in the public insurance marketplaces while Cigna does not.

While Aetna-Humana deal expanded Aetna’s presence in the Medicare Advantage space, the Anthem-Cigna deal is expected to radically affect the commercial insurance market, where both the companies have dominant presence in various geographies.

Similar to the Aetna-Humana deal, this deal is also being touted as formed to consolidate operations, take advantage of technology integration, streamline costs and expenses, leverage complementary offerings and markets and finally, to leverage better costs for end consumers through the negotiation of lower prices with hospitals and providers. Initial cost savings of $2 billion were announced for the combined company.

On the other hand, lower competition with a few major players could mean more power in fewer hands, premium increases and perusal of policies in favor of their shareholders than consumers.

If history is any indication, according to a 2012 study of the 1999 merger between Aetna and Prudential, premiums increased by seven percentage points.

Now, it’s for the federal and state regulators to watch out for consumers.

Image Courtesy of FreeDigitalPhotos.net

Aetna-Humana merger – What does this mean to Healthcare Consumers?


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On Friday, July 3rd, 2015, Aetna and Humana announced a $37 billion merger, the largest in the history of Health Insurance, in part cash and part Aetna stock for Humana stock at a modest 29% premium over Humana stock price as in May 2015. This merger values Humana at about $230 a share. Humana shareholders will receive $125 in cash and 0.8375 Aetna common shares for each Humana share. Aetna’s shareholders would own approximately 74 percent of the combined company and Humana’s shareholders would own approximately 26 percent. Upon approval from regulators, the merger is to be closed in the second half of 2016.

Over the past few years, Humana has set itself up as a leader in the Medicare Advantage space.

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According to a study conducted by Kaiser Family Foundation, Humana holds about 19% of the Medicare Advantage market as compared to Aetna, which holds only about 7% of the market. This merger allows Aetna to triple its Medicare Advantage business taking it to the #1 single carrier spot in the business trailed by United Health.

Nearly 7.5 million of Humana’s 14.2 million members were enrolled in individual or group-related Medicare plans as on March 31st, 2015; that’s more than double the combined number of Medicare enrollees at Aetna, Cigna and Anthem. This made up nearly 72 percent of Humana’s total revenue in 2014, compared to 25 percent for non-Medicare plans.

By contrast, Aetna is a leader in the diverse commercial insurance space.

With the employer sponsored insurance landscape changing and potentially slowing down, Aetna saw government business as the avenue for its future growth. The Affordable Care Act (ACA) is helping expand Medicaid coverage in several states as it attempts to provide health coverage for millions of uninsured people. Meanwhile, Medicare Advantage has seen its total enrollment triple over the last decade to 16.8 million people.

This merger has been connoted as being inevitable in a changing healthcare landscape post ACA. Both companies have announced that this merger will help consumers in terms of better products and services due to the merger making way for better technology, products and relationships with healthcare providers. Further, they announced this as a merger of complementary strengths in markets served and technologies used.

About 2 years ago, in May 2013, Aetna acquired Coventry Health Care for $6.9 billion as the first step in consolidating its government business. With that acquisition, Aetna had added approximately 3.7 million medical members and 1.5 million Medicare Part D members. In addition, Aetna’s Medicaid business had grown from 1.1 million members to more than 2 million members, and its Medicaid footprint had expanded from 12 to 16 states.

With the current merger, the combined Aetna-Humana company’s government business — Medicare, Medicaid and Tricare — will be based in Louisville, KY where current Humana corporate headquarters are located, and will be the biggest part of the company, totaling about 56% of the combined companies’ projected 2015 operating revenue of about $115 billion.

The combined company will cover more than 33 million people, only led by UnitedHealth Group and Anthem. The combined company would be the second-largest insurer by revenue, just behind United Health.

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Aetna and Humana are in nine of the same states in Medicare Advantage. Combined, they would have market share of 88 percent in Kansas, 80 percent in West Virginia, 58 percent in Iowa and 51 percent in Missouri. Regulator dynamics will soon be in play in these markets to ensure that monopolization is kept at bay and true consumer interest is in action by encouraging competition. How, is yet to be seen. However, such major consolidations potentially increase insurer’s influence with federal regulators.

Although insurers and investors apparently see a benefit in these mergers, it’s yet to be seen how the economies of scale play out for end consumers. With the size of the companies coming together in a yet larger consolidation, is more of scale economics still possible? Or are such mergers only going to lead to consolidation with one or two behemoths taking over an entire market, thus narrowing down any competition or innovation that comes with competition?

From a consumer benefit standpoint, its still unclear what is to come? With the power exercised by such a merger, the combined company could push providers to provide better outcomes at lower prices. You could also argue that there would be more streamlined and limited number of choices available for consumers to choose from. However, less competition could also lead to higher premiums, higher out of pocket costs and narrower networks.

While announcing the merger, Mark Bertolini, CEO of Aetna said, “You need to have enough power and enough presence at the local market level to be able to create relationships and efficiencies that are to consumers’ advantages. That requires “larger organizations, more capital, more technology and more intellectual property. That’s what’s driving the consolidation.”

One signal, if it means anything would be what Mr. Bertolini did in the recent past. He raised the minimum wage for Aetna employees to $16 an hour and lowered workers’ out of pocket insurance costs. He announced that he has incorporated those benefits into financial projections for current Humana employees post merger. He was also in the news recently for encouraging all his employees to take up free meditation and yoga classes at various Aetna locations to combat stress and get on the path of wellness. This speaks to where his true heart lies in terms of setting an example and signals a ray of hope on things to come from this merger.

Image Courtesy of FreeDigitalPhotos.net, Wall Street Journal & Kaiser Family Foundation

SCOTUS rules “For the People” on Affordable Care Act


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On Thursday, 06/25, in a historic 6-3 decision, the US Supreme Court reinforced the highly debated and controversial Affordable Care Act.

As you may know, under the Act, Health Insurance Exchanges were established as marketplaces to help individuals buy health insurance. The Federally Facilitated Marketplace serves individuals and small groups across the country, specifically in 34 states that did not build their own an exchange.

Based on annual income, individuals validate their eligibility for tax credits. Over 10-13 million individuals enrolled during last open enrollment. Around 7.8 million availed the credits during their health insurance purchases. These credits were provided both on the Federally Facilitated Marketplace as well as state marketplaces.

There was a lawsuit, the now infamous King vs. Burwell questioning the structure of the law that stated these credits be made available on exchanges of states. Since there was no mention of FFM or Federal Marketplace, it was implied that the credits did not apply to the states that depended on the FFM and as a result, the subsidies given out to date were deemed illegal.

If the Supreme Court hailed the lawsuit, it meant that about 6 million healthy people who already availed these credits would lose them for the upcoming open enrollment. There was a possibility that healthy people may not purchase insurance in the absence of credits and the carriers faced a skewed unhealthy insurance clientele, resulting in disastrous results on overall healthcare in US. The founding premise of the law, to ensure as many citizens are covered would have been at jeopardy.

Chief Justice John Roberts stated while reading out the majority opinion on Thursday, “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter.”

With SCOTUS acting on behalf of the benefit of US citizens, everyone can look forward to next steps in improving US healthcare distribution and delivery.

Image Courtesy of Wikimedia Commons

Quality Assurance – An Impediment or a Necessary Evil


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There is a famous tenet that applies to any project, be it tech or otherwise, although it has mostly been heard in the tech corridors for a while now.

If you want a speedy delivery, quality may not be optimal.

But, if the delivery needs to be stellar as well, costs will shoot up.

If you want to save on cost, it may take longer to deliver.

Basically, however you look at it, something’s got to give between cost, time and quality. Apparently, you can’t have all the three.

I beg to differ. It’s an old adage and many a project has been delivered and continues to be delivered in its guise.

I believe projects can and need to be delivered in earnest. In fact that’s the current market ask and if you do not respond to it, what you get to the market may be a tad bit too late to create any demand, for the market expectations have moved on a lot further due to the competition taking over.

Now, does speed really mean more cost? Not necessarily! It’s not about how complex the work at hand is, how enormous a job it is or how many resources will it consume. It’s about how well planned is execution, what kind of strategy and preparation have gone into the plan itself and what options are tapped to execute in an agile mode.

Also, does speed mean less optimal quality? And in order to ensure great quality, do you need to spend more money and need more time? I think that’s just regressive thinking.

Here’s a popular saying in the project management world, “Every birth takes nine months. Similarly, every project needs the time it deserves. You can’t deliver what takes nine months within a month just by adding more resources.”

I agree to the above to a certain extent. Throwing more resources at a problem doesn’t necessarily solve it. However, there is a threshold after which certain changes can be brought about, either by induction of the right resources, parallel processing where possible or taking productivity to a higher level by managing the team mechanics to deliver.

Speed to market or deliver doesn’t mean less optimal quality or more cost at all. When it comes to quality, how that’s perceived within the team at work and how it’s executed upon become very crucial. If there is a professional quality assurance team in place to handle that function for a project, then, it’s only viable if the scale of the project demands it. In such situations, it’s important to ensure that the whole project team clearly understands the precise objectives of the quality assurance team. From requirements gathering to the architecture design, every function has to be focused on simplicity and speedy delivery. Developers have to be on top of their game to ensure cutting edge code is going out and the quality is checked within their realm, before it goes out the door. QA should be more focused on functional review to meet market needs and push the envelope for a speedy delivery. If the team works in this fashion, orchestrating in high productivity modes, miracles are possible where costs are kept under control, and a high quality product reaches the market on time.

However, the truth of the matter is that, in more cases than not, the quality assurance team ends up being a gatekeeper for the work churned out by the development team and that’s where the issue rests. A top-notch development team should not need a quality assurance team behind its heels cross-checking each line of code being churned out. The development team should be accountable for what they deliver and should be proud of the job they do sans the quality team. The quality team, as I said before should be just focused on ensuring the market gets what it demands. In fact, their work should be non-existent.

And the day, we get there with minimalistic or non-existent quality teams, would be the day where cost and time also do not have as much bearing on projects and what gets delivered to the market. The best part, neither the creator nor the consumer would have any apprehension as to the product that has been put out in the market.

Image Courtesy of FreeDigitalPhotos.net

The Inside Truth About Success


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Visionaries are a myth. The epithet is associated after the fact. Historically, and in the contemporary world, none of those who have succeeded set out with a vision to make an earth shaking impact with their success. They all started with a fire in the belly, to do something unique; some to make a difference, some to make something of their life, others for the fame and money, and yet others, just for the challenge and adventure of it.

The universal truth is that everyone that set out to succeed stumbled upon their success by following a passion or simply, by pursuing what they were fascinated with or got good at. However, not all of them set out on a pre-conceived chartered path. Some did not have the wildest idea of where their journey would lead them. There are several that started out on a certain path but eventually ended on one they did not, initially have the slightest idea about.

What is common among all of them is that they had a dream, a desire to excel themselves and for others, to make a difference and that passion, a strong will to endure all that crossed their path, a resilience and unwavering commitment to see it through; that sheer dominance of spirit is what turned their dreams into reality, their passion into their engagement, their commitment into their reward and today, they stand in the annals of our history as visionaries.

The current generation has a lot of young men and women, out to change the world. It’s a different time we live in where the wherewithal is in abundance; probably more than in any period of history to make this happen for those that seek to. However, the passion, the commitment and the dream need to be the same and start the same way, to change one’s own destiny to eventually change the world.

Now, where does your passion lie? What are you set out to do? How do you plan to change your world and ours?

Image Courtesy of flickr.com

Success – Where do you look for yours?


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Success is a two way street.

Not many realize that and keep running hard on the wheel of daily life, doing their job and hoping to succeed some day.

Let me tell you that by following this formula, you may make a living but, will not find the success that you aspire for, in your career or in your life.

Here’s a universally acknowledged way of making things happen.

  1. Have a vision of the life you aspire for,
  2. Chart your path of realization,
  3. Plan and Execute.

Voila! Your aspirations come true.

As simple as it may seem, much goes into this process in terms of breadth and depth to achieve results. Yet, what you find in terms of achievement may fall short of your expectations.

I would like to focus on point 3 above and share a widely visible but, often overlooked ingredient to making things happen.

As I said at the beginning, success is a two way street. Generally, everyone who is out to succeed is so wrapped up in their own definition of success that they are out to do it by themselves and, for themselves. This is a very hard way of finding any success and if found, very little.

True success finds you when you are out to help others succeed. Don’t focus on your success but on the success of others. Make it your mission to help others succeed; your friends, co-workers, associates, team members, partners and clients, in short everyone you interact with or come across. When you make it your agenda to help others succeed, your success happens without really pushing for it or consciously trying. The more people you help succeed, you will in turn be that much more successful. How positive than this can it get?

Change the way you comprehend your success. Your success is not proportional to the amount of effort you exert but to the effort you expend in helping others succeed. In fact, not even that, its proportional to the amount of success enjoyed by those that you have helped.

Turn around and measure your success with the success you have helped impart to others. Learn to find your success in that of others. Without even your realization, you start to accrue immense success for yourself through the multiplier effect. The best part, you did not have to strive for it. In fact, you would have spent time doing something very fulfilling and gratifying; helping others succeed. Result; you have developed a vastly successful community and your success puts you at the pinnacle of it.

So, who are you out to help succeed today?

Innovation is an accident!


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The act of innovation and the results thereby are always by accident. And, that’s when they are the sweetest.

Innovation is the after effect, the result of creativity. And when is creativity at its best?

Well, there are two schools of thought. One believes that you need to have experienced certain hardship, been under pressure or difficult circumstances and as you toil to get out of this situation, you innovate. You think and act in creative ways to solve the issue at hand and come up with some very novel ways of doing so.

Another school of thought believes that true innovation, for that matter quality innovation happens in an environment that helps nurture creativity. True breeding grounds of creativity need to be established and encouraged where an issue to be solved is first recognized; then, those enlisted to act on solving the issue are freed up of any other responsibilities and are charged with focusing on this one thing.

More often that not, history has shown us that true innovation happens under pressure, when you are trying to solve an issue you are struggling with. However, the latter is true as well, but what happens there is not creative innovation to solve an issue, but more of solution enhancement and optimization; albeit creative.

Let me enumerate through some examples.

The invention of the round wheel was innovation that happened to fulfill a need, transport; the improvisation of the wheel to make it last longer, go faster, adapt to different vehicles, etc. falls under solution enhancement.

Connecting people through e-mail and Facebook during this Internet age was innovation addressing a need, social connectivity. Twitter, chat and the different facelifts we see of Facebook are improvisation and solution enhancement.

Generally speaking, the birth of innovation to solve an issue happens purely due to the urge to solve the issue; there is not much needed in terms of money and establishments to do that for its entirely based on frugality and the excitement to see something new. What follows after that, demands a lot more in terms of money and material to improvise and scale.

Not to say that one is righteous than the other, we all know that the world needs both.

Creativity, whether in profession or hobby is the spark that makes what you do purposeful. Where do you find your fulfillment?  In the former or the latter? Once you can answer that, you will know where your passion, your heart lies and where you can prosper and thrive.

What if you always received so much more than you expected?


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What if you always received so much more than you expected? Saw an ad on TV at the airport today for some hotel chain that said this.

What if you did? Well, I think it would be exciting for a while to be surprised, but soon that would turn into an expectation. That is where it generally stops but shouldn’t. With such expectation should come greater responsibility, to raise the bar on expectations, to think beyond what is normal at that point in time and to look forward to more surprises that build on the last one. Isn’t faster, better, cheaper what the world is driving toward every single moment.

Now, let’s review the other side of the coin; giving more than what is expected. What if you give more than is expected of you? Give more to your work, your colleagues, your partners, your clients, your family, your pets & yourself. What if you extend yourself a bit more, to give more of yourself, to surprise those expecting from you. Isn’t that possible? Of course, it is. You just need to make up your mind and put conscious effort initially, and before you know, it will become a habit; more so second nature due to the thrill you experience in surprising others, not to mention yourself. Now that the bar has risen, you cannot go back to your old self since that is no longer relevant in view of current expectations. The new “you” is the normal now. And as the new “you” is what those around you are accustomed to, time to raise the bar & share surprises all over. All this is very much possible and puts you on the path of constant improvement & growth, both on your professional and personal fronts. What’s in it for you? You come out stronger & more enriched, enriching the lives of those around you and when you look back at where you started, that will be a distant memory, right at the beginning of a sweet, successful & fulfilling life.

And what did you have to do to make this happen; a conscious decision to surprise those around you by exerting a little bit more than they would expect of you.

Think about it, will you?

Think Outside the Box!


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Over the last 2 decades, the word “disruption” has been thrown around quite a bit. “Innovation”, the act of creating something new and “Disruption”, the act of changing status quo with something better have gone hand in hand. These terms are interchangeably used or used together when talking about making the world a better place with a new invention or discovery.

If you really look into it, access to technology and our handle on it to make it do things that were never imagined possible has been key to the familiarity of these words over the last 2 decades. The world, as we know it has probably seen frequent and much innovation & disruption in the last 20 years.

Innovation doesn’t necessarily have to be something very dramatic. It can be subtle, slow, even making something that already exists just a tad bit better.  What’s important is the mindset to make things better, which I believe, is more prevalent with those living in current times than ever before. Not for the emoluments it may bring but more so for the sheer joy in transforming the way we live to be that much more efficient.

History has shown rich and varied times of innovation as well, but more in the mechanical and automation areas than technological as is now. Those were difficult times and I have much respect for the inventors of the time who gave us what we consider our basics today and, not so much as give a second thought to it. The electric bulb, telephone, automobiles, etc., things that we take for granted, were invented by people who had many odds to face but just kept up with their dreams until they were realized.

Today’s entrepreneurs & innovators fight against odds as well, albeit of a different kind than older times, to realize the dreams they set out with. Much is possible and sooner too in our times, especially with the entire world being fertile ground as one global market for whatever these adventurers come up with. Its instant validation of their hard work, if the world acknowledges this work, ensuring great returns for them. Such results make it possible to encourage more to take the journey while the ones that succeeded continue down the path of another great adventure.

What is interesting and refreshing in our times is that great returns in terms of money and popularity no longer tend to be the end goal of success, people set out to achieve. Our innovators still continue down the path of doing more, discovering more and continue to tread the path of making the world better. Money and fame are seen as simple outcomes of succeeding at what they set out to achieve and that is truly remarkable.

For all the inquisitive minds out there, go on and embark on your journey of innovation and disruption. There is no telling what is under which rock. And, while you are at it, enjoy your adventure thoroughly for that is the most precious aspect of it all!

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