LO O K I N G FO RWA R D
The Four Industry Trends That Threaten Traditional Health Brokers And how to address them PART ONE OF THREE
By Nelson Griswold Traditional health brokers are facing an existential threat from trends born largely out of federal laws. The Affordable Care Act (ACA) is old news, but it created conditions that fostered an industry trend that has been slowly but steadily taking hold. While all brokers not living under a rock are aware of the 2021 Consolidated Appropriations Act (CAA), few realize how its myriad rules are transforming the health broker role. A slew of articles have analyzed the impact of these federal laws and regulations on health plan sponsors and the healthcare industry. Few, if any, however, are discussing the powerful trends these government rules have spawned or are accelerating and their growing impact on health insurance brokers. Yet, these trends already are changing almost everything about the benefits broker role and employer-sponsored health plans. There are four major trends forcing huge changes in how employer-sponsored health plans are being sold and designed: 1. Transactional brokers are becoming consultative advisers 2. These advisers are moving up from HR to work with executives in the C-Suite 3. Self-funded plans are replacing fully insured plans 4. Advisers are using cost containment strategies to lower healthcare costs One broker feeling the impact of these trends is Charlie (name changed as a courtesy), a successful California benefits broker for over 20 years in Glendale and Pasadena, north of Los Angeles. Staring blankly at his computer screen, Charlie’s eyes are fixed on a list of companies that includes some of his biggest accounts. 14 | CALIFORNIA BROKER
He has no answer to what he sees. Although specializing in the under-100 group market, Charlie always has had some larger accounts with 100 to 500 employees. He has worked almost exclusively with fully insured plans from Kaiser, Anthem and United, having written just one self-funded plan, at the client’s request and through Anthem. His success has been a product of his technical expertise with the carrier’s fully insured plans and, especially, his excellent relationships with his HR clients. Friendly and extremely likeable, Charlie had built a substantial book with nearly 100% retention. Until recently. Charlie is looking at seven groups he’s lost in the past 18 months — each to a broker of record (BOR) change. Ranging from 53 to 428 covered lives, all were fully insured. So how did Charlie, with a history of near-perfect retention, lose so many good-sized groups to other brokers? He learned the hard truth thanks to his strong HR relationships at these groups: Every decision to change brokers came, not from HR, but from the company’s C-Suite — the owner or CEO/CFO executive. All but one of the lost groups moved to a self-funded plan. And four of the six employers that went self-funded were seeing substantial savings due to innovative cost-containment strategies, ranging from $1,000 to $2,000 per employee per year (PEPY). His HR contact at the 483-life group reported year-overyear savings of over $700,000. Despite his success over two decades, Charlie has no answer to this new model for employee benefits, a model that leaves
CalBrokerMag.com
JANUARY 2024
