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The Evolution of Insuring Small-to-Midsize Employers

Posted by on Jan 9, 2017 in Access, News, People

Monica_Majors_6x9_7389In this article published in the January 2017 issue of California Broker, Sutter Health Plus Vice President of Strategic Sales and Marketing Monica Majors discusses how managing health care market changes can help small-to-midsize employers provide cost-effective coverage options for their employees. 

We know the health care landscape has changed over the past decade. Em­ployers face new challenges. Health plans have responded by overhaul­ing product offerings. Benefit brokers and agents have brought expertise on the changes to employers. Manag­ing these changes will help small-to-midsize employers better understand cost-effective coverage options for their employees.

Over the past decade, business owners have faced a myriad of chang­es. The workforce has been shifting. Last year, Millennials surpassed Baby Boomers as the nation’s largest liv­ing generation. Technology has been evolving quickly. Today’s consumers are less likely to leave home without their mobile device than without their wallet. Employers are facing height­ened consumer expectations; a more tech-savvy population is demand­ing anytime, anywhere engagement. While technology allows for increased service or faster response rates, it also brings added challenges, ranging from the need for better data management to increased competition and more.

The healthcare-related challenges employers face have also changed. More than a decade ago, health plan premiums were growing by leaps and bounds. Back-to-back, year-over-year increases of 30 percent or more were not uncommon. Small group employers, in particular, were struggling with how to compete by offering comprehen­sive benefits. To cope, some stopped providing dental and vision coverage. And many shifted more costs to em­ployees.

All of this created an environment conducive to change. And in response, presidential candidates used their plat­form leading up to the 2008 elections to promote healthcare system over­haul. The passage of the Patient Pro­tection and Affordable Care Act (ACA) two years later brought about sweep­ing changes in short order—changes that forever altered the health care landscape in the U.S. Employers today are still struggling to understand and interpret what the law means for their businesses.

The entire underwriting process changed too. Today more people than ever are able to find coverage through public exchanges and Medicaid. How­ever, little, if any, cost relief has been realized. As the market landscape changed, carriers exited markets, and mergers and acquisitions reduced the number of players, leading to fewer choices for buyers. Products have evolved to meet changing regulatory requirements. Through it all, employ­ers continue to struggle with offering the right benefit packages to attract and retain talent.

Insurance brokers have responded to market changes and continue to find ways to attract and serve small-to midsize commercial customers. They’ve built expertise and assumed a more consultative role in the market­place. They’ve become familiar with various elements of the ACA and the effects. They understand tax impli­cations and other requirements, and share that information with business owners and benefit managers to help them navigate the ever-changing envi­ronment.

Larger brokers have developed or leveraged in-house research and com­pliance capabilities. Smaller ones have made use of expertise found in the carriers they represent and through independent resources. And they’ve used this knowledge to make sure cli­ents have the information and health plan products they need to remain competitive—and compliant.

The reality is that the healthcare marketplace continues to evolve. To­day we see more preferred or narrow network options available, and many midsized employers are exploring self-funded options instead of fully-insured products. Many providers find them­selves with full patient panels or very limited access—largely because of an increase in the number of insured people under the ACA. And increased regulatory and compliance require­ments are demanding providers and payers to do more for less.

As a result of these changes, em­ployers seem as if they are caught in the middle. Not only must they man­age the day-to-day operations of their businesses and the competitive land­scape in their industries, employers also need to continually re-evaluate their coverage options and look for cost-effective ways to retain their em­ployees.