For the past several years, the annual BenefitsPRO Health Care Survey has shown benefits brokers and consultants are a staple in the employer health insurance landscape. This year’s results, gathered in the midst of the COVID-19 outbreak, show that the industry continues to soldier on, and as disruptive change continues to impact many aspects of health care, the role of the broker grows ever more essential. As in past years, our annual survey captures a mix of views from consultants (20%) and broker owners (15%), as well as general manager/managing agents (18%) and broker employees (21%). Of the 427 respondents, 37% come from a smaller practice, with just 1 to 5 employees, while 18% have 6 to 50 employees. Small groups make up the biggest portion of the book of business for most respondents. Let’s explore some of the key themes emerging from this year’s results.
Slow are the wheels of health care change, even during a pandemic.
By Emily Payne
Consistency
amid
chaos
2020 Health care survey
Shifting coverage
Growing adoption of tech tools
Voluntary benefits aren’t going anywhere
Threats to the health care system
Consolidation and competition
On the horizon
Graphics by Chris Nicholls
Survey respondents saw only a minimal drop in business over the past year, occurring primarily in the small-group market, where 47% of respondents saw decreases between 1% and 24%, and 6% saw between 25% and 39%. In the coming years, 36% expect the number of small groups dropping coverage to increase, either a little or a lot, while 47% expect it will stay the same. Despite this, a quarter of respondents (26%) expect their compensation will stay the same, and 29% say it will increase, compared to 27% who expect to see a decrease. So where is the increase in compensation coming from? As the carrier relationship changes, many respondents expect more business to come from fees in future years. Currently, 40% say none of their compensation comes from fees, while 16% say 50% or more does. No one sees those numbers decreasing, but 34% see it increasing either moderately or significantly. Meanwhile, self-funding strategies continue to grow in popularity, with 43% of respondents expecting to see a moderate increase in business. This could be in part due to the continued growth of consumer-driven health care strategies; 77% of respondents say that data and transparency tools have had a positive impact on their business, as have concierge services (52%), reference-based pricing (49%) and direct contracting (35%).
With so much of daily life occurring online, it’s somewhat surprising to see that just 24% of respondents say more than three-quarters of their accounts use online enrollment tools, especially when 69% agree that they’re a critical value proposition. Still, use is increasing, with 54% of respondents citing online enrollment tools as one of the most common ways to select and enroll in benefits. When respondents were asked to identify top enrollment methods, they gave both group meetings with an enroller (45%) and one-on-one meetings (40%) high marks. “Improvements in online enrollment tools are allowing employers and their employees to seamlessly and securely enroll in benefits,” says Robert Love, president of the benefits division at BenefitMall. “These online tools greatly simplify the enrollment process with features like e-signatures and a paperless experience in a secure environment with very high data quality. We expect to see even further advancements and adoption with online enrollment throughout the next year.”
While many experts predict growing interest in financial wellness benefits in the wake of the COVID-19 pandemic, we likely won’t be able to gauge to what degree until after the 2021 open enrollment season. For now, interest in voluntary benefits continues to hold strong, with dental, life and vision benefits continuing to be the bread and butter. “These are absolutely our top ancillary benefits,” says Heather Torres, benefits team lead at Edgren, Hecker & Lemmon Insurance (a Brown & Brown affiliate). “Dental and vision are critical to the well-being of an aging workforce. Disability has been a distant third, but now, I think employers and employees will focus more on it. As they see how the state systems are not meeting those needs, they will need to add or increase current coverage.” In fact, 69% of respondents expect to see some increase in ancillary sales, while just 8% expect a decrease. How the economy looks this fall might have a major impact on those numbers, as 40% of respondents say price is the most important factor to their employer clients when offering voluntary benefits, followed by convenience/ease of enrollments (30%). While price and convenience are also high priorities when it comes to choosing carrier partners for ancillary benefits, a lot more thought must go into it. “Data security is one of the biggest concerns for brokers and their clients,” Love says. “We find that customers want to know what measures are in place to safeguard personal information. Brokers want to partner with companies that have industry-leading cyber security measures in place to ensure their information and their clients’ information is fully protected.”
Talk of Medicare for All and single-payer health care gained significant momentum during the early stages of the Democratic primary races, but the movement came to an abrupt end when former Vice President Joe Biden emerged as the frontrunner. Still, the seeds of change are there, and while 73% of our respondents say talk of Medicare for All is not having an impact on their business, 17% said it will have a negative impact. Though a dramatic overhaul of health care is unlikely, 80% of respondents see the upcoming presidential election having either some or a significant impact on their business. That should come as no surprise, given how significantly the health care regulatory landscape has changed under the Trump administration. Most respondents said expanded options for short-term health plans and association health plans have had little effect on their business, but 25% say new individual-coverage HRAs are helping a little. The regulatory upheaval has had one positive consequence: Clients look to brokers for guidance on ACA and other compliance topics more than ever, with 83% of brokers agreeing with this statement. “Everyone is so focused on medical rates and benefits,” says Leslie Carlet, president of American Benefit Partners. “Carriers and clients really rely heavily on brokers, and expect brokers to be an outsourced department for their own firm. ”As for the administration’s hospital price transparency rule, expected to take effect January 2021, while 63% of respondents anticipate its implementation would have a positive impact, most are skeptical that it will actually happen. Among respondents, 37% don’t think it will go into effect, and 48% expect that if it does, it will be with significant changes. Perhaps the biggest threat to our health care system this year will be the COVID-19 pandemic, with 86% expecting it will have a significant or moderate impact. “Let’s hope that health care providers continue to see patients virtually, even after COVID-19, and health insurers pay them to do so,” Carlet says. “Health insurers have previously made it so providers must see patients in person in order to be paid, when patients may only need a short meeting to get a refill.”
48%
37%
15%
Merger activity in the benefits industry continues to heat up. Among this year’s respondents, 32% said they expect their company to buy a retiring broker’s book of business, compared to 30% last year. Similarly, the percentage who expect their brokerage to acquire or merge with another has increased from 26% last year to 28% this year. Among major brokerages, Willis Towers Watson and Aon made headlines this spring with the announcement of a planned merger, while last fall, Cigna’s group life insurance business was bought by New York Life Insurance Company. According to PwC, the last quarter of 2019 saw $12.5 billion in mega-merger transactions, the most in two years. Adding to the industry shakeup is the threat of outside disruptors. Amazon & Co.’s Haven venture continues to draw attention, though the industry is split on whether the venture will help or harm the health care industry: 35% predict it will lead to moderate improvement, while 29% predict moderate harm, and 7% go as far as to say the harm will be dramatic. Of more immediate concern to brokers is the push of HR and benefits administration companies into the benefits space. As noted by one respondent, “if you are looking for what kills us, it’s direct selling from carriers and payroll companies,” while another noted that “health care offered through apps, online, or phone” will have an impact. Last year, the prospect of payroll companies expanding into the benefits field was seen as likely to have a negative impact by more than 41 percent of respondents. “Companies today are looking for a single resource to manage their HR and benefits programs,” Love says. “The most successful benefits administration providers are able to meet this need by successfully integrating with multiple partners. From benefits to HR, payroll, retirement and compliance services, businesses need easy access to all of these resources and much more.“
New this year, we asked respondents about areas where they expect to see growth in the near future. Forty-five percent said FMLA revisions will become a bigger issue. Meanwhile, 42% are keeping an eye on caregiver benefits, and 31% expect to see growth in the gig economy.“ Gig workers are essentially self-employed and cannot get a lot of the benefits that ‘regular’ employees do,” Torres says. “Carriers will focus on ways to help gig workers, or the gig economy will move back to being ‘regular’ employees again.” FMLA and paid-leave legislation have been a growing area of interest in recent years, but the COVID-19 pandemic has accelerated focus in this area, as many employees have had no choice but to risk exposure to the virus so that they can continue receiving a paycheck. Caregiving benefits have similarly been growing in interest, but slow to take off. But with an aging boomer population continuing to make its exit from the workforce, more pressure is being put on the “sandwich generation” caring for elderly parents and children.
More to come This year’s health care survey captures a defining moment for our industry, one in which we are on the cusp of major upheaval, not just in health care but in nearly every aspect of American life. As we look forward to seeing how our industry and country change in the coming year, we also expect to see benefits brokers and consultants continuing to play an integral role in guiding that change.
