Very few benefits agents/brokers would disagree that there are problems with our health care delivery system, even without the Patient Protection and Affordable Care Act (PPACA). The fact is the dramatic inflation in the cost of healthcare over the last 10 years is a problem that must be dealt with.
If we are going to survive as an industry, agents and brokers MUST take a more proactive role in helping solve the inflationary problem. This brings up the question, HOW?
If we are going to be part of the solution, the first thing we have to acknowledge is that we have been part of the problem....OUCH! Of the 10+ factors that have a major impact on the cost of healthcare 7 are influenced by the broker: 1) the uninsured and underinsured population 2) lifestyle abuses 3) the aging population 4) over utilization 5) defensive medicine 6) administrative costs and even to some extent 7) medical malpractice litigation. By not effectively educating and engaging the consumer (the employee), we have been insulating ourselves from these problems.
To begin to deal with these root causes of inflation, a metamorphosis must occur in our delivery system. If we accept that we have been part of the problem, then to assume that we can expect a different result by doing the same thing over and over is the very definition of insanity. This required change in delivery paradigm, however, is the greatest marketing opportunity that the industry has experienced in the 35 years that I have been in the business. But, it will require us to make significant changes in our marketing strategy and begin working as part of a team of professionals.
WOW, that's a revelation to most of us, but it's true. The PPACA is driving the industry to embrace a more consultative approach to benefits delivery that includes greater focus on plan design and communication. Whether it is through market expansion or fee for service planning, the traditional product driven, "spreadsheet" sales process is on the way out. Not that spreadsheets won't be needed, but as the broker takes a more consultative role, the spreadsheet will be relegated to broker evaluation for support of final recommendations, not for presentation to the client or prospect. Another change is that the primary point of sale will be with senior management (CEO or CFO) rather than the Director of HR. This is because to truly deal with some of the root causes of the inflation, financial decisions need to be made that are outside the authority of the HR department.
Over the last few years there has been an almost endless stream of articles dealing with the need for a more consultative approach to the sale of health and welfare benefits. However, very little has been offered in the articles to identify a structured strategy to do this. In most cases the ideas presented are just ways to re-design the product portfolio more creatively with fancier spreadsheets. If this is all that you are doing, you may become a statistic in the benefits delivery evolution/revolution. As much as it may disturb some veteran agents/brokers, this is a necessary change for us to survive and prosper into the 21st century but with the change will be beneficial.
A similar transition was experienced by the life insurance industry between 1979 and 1986. The introduction of Universal Life (with resultant reduction in premiums and commissions) powered the transition from an industry controlled by rate book and spreadsheet salesmen to one dominated by the Financial Planner who works as part of a team and does far more than just sell products.
So, lets get started, the heart of the consultative sale is problem solving and trust me when I say that premium inflation and benefit erosion will not be the only problems you will have to deal with to be consultative. You will need to deal with compliance issues on a variety of levels. This does not mean that we are to practice accounting or law but we sure as heck can diagnose and refer.
One of the most important keys to unlocking the solution to the inflationary problem is to promote CONSUMER ENGAGEMENT in the design process. The private health care delivery system cannot hope to influence the cost of healthcare or deal with the uninsured problem without it. To do this, we must help employers develop a benefits partnership with employees. In this way we can create an environment that can positively impact the first seven core causes of inflation identified earlier. With employee participation, the broker can help employers develop a long-range "strategic plan" to effectively combat inflation, save on costs, recruit and retain quality employees, increase employee participation and mitigate compliance risks.
Oh, by the way, increasing participation is where the opportunity for our prosperous future lies. The disability, life and supplemental medical insurance needs of the working middle class have been ignored since the life insurance revolution of 1979. According to LIMRA this is a multi-billion dollar market. Unlike the oil industry we are not prohibited from "drilling" into these markets accept by our own reluctance to learn how. By developing a team of strategic alliances the benefits broker can tap these markets with very little extra effort. The good news, the revenue potential is equal to what is currently being generated on employer sponsored group benefits. When I was selling benefits in the 70s and 80s, 60% of my benefits revenue came from voluntary worksite sales.
Becoming a valued benefits consultant/advisor
What are the essential ingredients for developing a consultative benefits practice? Well let's examine that.
Education – Educational certification programs (RHU, REBS, CEBS, etc.) are only a starting point. We must constantly attend seminars and workshops to learn to be innovative and creative in plan design strategy. In our business we must deal with no less than 12 IRC Sections (79, 104, 105, 106, 125, 129, 132, 137, 213, 220, 223 and 1563) and 6 non-discrimination and privacy laws (ADA, COBRA, ERISA, FMLA, GLBA and HIPAA). How many can you name and explain to a client? Extensive knowledge and understanding of these complexities offers us the opportunity to "beat the system" legally and creatively.
Strategic Alliances – No one has all the answers. Good strategic alliances can provide a great resource of "intellectual capital" and can help produce new clients. Such alliances should include CPAs, Attorneys, Financial Planners, Third Party Administrators, carrier relationships, enrollment firms and more.
Membership In NAHU – Would you choose a doctor or dentist that is not a member of the AMA or ADA or an attorney that is not a member of the ABA? Probably not! Then why are so few of us who are active in the health care delivery system not members? You owe it to yourself and the industry to protect our profession and keep ourselves on the cutting edge.
A Structured Planning Procedure – This can be presented to a prospect or client to promote development of a multi-year strategic plan. The following charts show the basic differences between the traditional product driven "paternalistic" approach to benefits and a consultative "needs-based", "benefits partnership" strategy. One major change in a partnership is that the employer is no longer responsible for choosing core benefits for employees but to PROVIDE EDUCATION for their employees so they can make wise benefit decisions. And, guess who the teacher is...I'm sure you've guessed it.
Elements of the planning process we utilize are:
- Discovery – a one-page fact finder to identify risk exposure and planning opportunities
- Benefit Strategies Proposal – strategies to be evaluated condensed in an Executive Summary of less than 2 pages (contains no product information)
- Employee Benefits Survey – input from the "other partner"
- Benefit plan analysis and risk assessment Plan Design Presentation – includes product recommendations and much more. Again this presentation should be condensed in a 2 page or less Executive Summary
- Plan implementation strategy – structured timeline and responsibilities for enrollment
- Enrollment – The will include mandatory group and individual meetings with each employee (education and communication is the key to market expansion)
- Annual review and update
All of the things that need to be done to start to deal with the core problems of inflation and the uninsured require time and planning. Just a few of the tools that a long range strategic plan can employ are:
- Defined contribution strategies
- CDHP's, HRAs and HSAso Flexible Spending Accounts
- Core group plan options medical, dental, vision, etc.
- Voluntary benefits
- Wellness programs
- Transportation & Parkingo Long-term care plans
- Adoption assistance
- Employer risk exposure to identity theft (group legal services)
- And much, much more.Element
Developing a multi-year strategic plan also locks out the competition and takes the focus off the annual premium/product struggles.
We must always remember, if we believe and take action, the problems we are facing are nothing more than the seeds of our greatest opportunity.