Insights from Wellthie
Although the energy that charged the Republican led government to prioritize the repeal and replacement of the Affordable Care Act (ACA) has been met with more questions than answers, make no mistake: change is on its way.
For many small business owners, this is welcomed change. During the policy formation process of the ACA, small business advocacy organizations, associations, and small business owners themselves felt excluded from the process. The result of which was not only a deep-seated skepticism of the law, but legitimate concerns that the law did not do enough to address their needs. The energy and unknown surrounding the future of the law is an opportunity for these small business stakeholders to make their voices heard and gain a long-awaited seat at the table in a way forward.
On February 7th, the House Small Business Committee led a hearing to do just that calling upon health policy experts, the National Small Business Association (NSBA), The National Association for the Self Employed (NASE), and the National Federation of Independent Business (NFIB). The conclusions from the hearing clearly stated what small businesses want from the new administration: affordability, flexibility, and predictability of health care and coverage.
Cost remains the top cited reason why small businesses do not offer health coverage to their employees. This was true before the ACA, during the implementation of ACA, and now years after it. This unwavering historical truth points to the looming problem the ACA and the insurance market itself stepped away from addressing: if America’s health care delivery system through an employer is both efficient and effective means to covering the population, we are ignoring the largest source of employment to reach this goal.
In its current state, major medical small group plans are far from an attainable reality for the majority of small businesses. Per the NFIB, of the 60% of small businesses not offering health coverage to their employees, 52% said the cost of coverage itself was the deciding factor. This coupled with the cost of complying with coverage legislation, like the ACA, makes offering the benefit all the more unattractive.
If the industry really wants to move the needle on small group health insurance, this is the sticking point: make coverage options more affordable to the small businesses owner, and give them additional cost saving options, or less volatility in year over year premiums, to sustain it.
Make no mistake, the ACA has effectively covered more American’s than ever before, reduced coverage discrimination, worked towards stabilizing health care costs, spurred industry innovation, and placed regulatory guardrails enhancing the quality of health coverage. Yet much, if not most, of these positives directly benefited those in the individual market, a market that small businesses have been inhibited in taking advantage of.
What small businesses are looking for are a better way of taking advantage of the individual market for their employees. Per the NFIB, in 2015, 16% of small businesses attempted to do just that by helping pay for individual plans of their employees, and under the ACA, were penalized for it. Additionally, little was done to assist those contracted or self-employed benefit from the tax advantages of employer sponsored insurance. This compounded with the regulatory compliance headache left many small businesses wavering in the new health insurance landscape.
Flexibility, as small business stakeholders see it, comes as innovation in the insurance market. New models for cost-sharing, like Section 18001 of the 21st Century Cures Act’s approach to HRA’s was cited as a direct example of this, with hopes of more to come.
Another side effect of what many small business owners viewed as convoluted legislation was confusion. Per the NSBA, 14% of small business owners spend more than 20 hours a month on federal regulations, noting the ACA as one of the most burdensome. Many were left feeling not only unsure of their compliance with the law, but also unsure of how to take advantage of it. The Small Business Tax Credit was one such example that small businesses felt was not simple nor broad enough to take full advantage of.
The confusion for small businesses owners was not aided in the fact that their current health plans were being “grandfathered,” their premiums were still greatly rising now along with deductibles, and they were unable to gain transparency into health care costs for themselves and their employees. This uncertainty stifled the growth in the small group market despite the ACA’s opposing intention with the inclusion of SHOP, the small business tax credit, and leaving small businesses without a coverage mandate.
For the small business owner, predictability comes in two forms: increased transparency to health care costs year over year and less convoluted legislation.
By prioritizing affordability, flexibility, and predictability of health care and coverage, small business are looking to be part of the solution in reducing the current barriers preventing mass entry into the health insurance market. And it looks like the new administration is listening.
We’re sure you’ve heard of Zenefits. We’re also certain that what you’ve heard follows a narrative of lessons learned from the rise and fall of this unicorn, once lauded for its innovative technology in a paper driven insurance industry. Industry brokers, who felt the most threatened by Zenefits, were also the most outspoken on the errors made by the company. Although brokers have rightfully expressed how shortcuts cannot be made in such a complex industry, they have wrongfully forgotten how Zenefits paved the way for needed innovation.
Before brokers were pointing out Zenefits’ errors, they were fearing its success. Zenefits provides a solution to a problem in an industry that was previously void of disruption. By streamlining the arduous task of employee benefits management, Zenefits provides the accessibility and transparency that businesses had long been searching for. Additionally, their tools gives employer groups their time back, freeing them from administrative complexities to focus more on their business. Employee groups were not only expecting more from their brokers, they were ready for technological solutions.
These technological solutions are nothing to be feared, and they are far from signaling an end to the broker industry. In fact, technology is working to solve the biggest pain points of the health insurance industry, including those of brokers. And, despite its missteps, there are lessons to be learned from a disruptor like Zenefits:
1. Give small businesses their time back
The core of Zenefits business was taking the administrative burden off the shoulders of small business owners and simplifying the vast complexities of insurance. By nearly automating human resources, small businesses saved time and hassle. Brokers must do the same for their clients. Employers want to deal with brokers in the most efficient way to understand their insurance options. Streamlining the process itself helps employer groups effectively do that and make a faster decision- saving them, and their brokers, valuable time.
2. Tout your expertise and (free) service
Perhaps the largest value added to small businesses of the Zenefits model is that the software was provided to them at no cost. For small businesses, saving on overhead expenses is an enormous value add. Brokers must find innovative ways to highlight the free value add they provide their small business clients if they expect to keep them. For brokers, the value add is clear: small businesses gain an expert business advisor to support their insurance needs.
3. Invest in technology
The complexities of streamlining benefits for small businesses go further than time and regulation. Outdated technology has forced employers and brokers into needless paperwork, faxing, spreadsheeting, and juggling multiple systems simultaneously to understand and obtain the best insurance option for their group. Technology is an effective solution that simplifies insurance administration at the click of a button.
In insurance, where the role of the broker is essential, technology provides the access point to improve the process brokers and their small business clients want. And its adoption is what makes insurance more approachable and convenient. Now more than ever, employers are expecting it.
Identifying why Zenefits grew so large so quickly in the first place comes with the recognition of the value it brings to an industry ripe for innovation. Brokers must embrace the role Zenefits and similar insurance disrupters play in the changing landscape, and adopt the latest technologies to stay ahead of client’s needs. While technology will never replace the brokers mastery of regulation, carrier offerings, and inside industry trends, it will elevate the role of the broker business in the eyes of the industry, small business clients, and the technology disrupters to come.
This article was originally published in BenefitsPRO’s Broker Innovation Lab.
New Year’s resolutions are fun to make but difficult to keep. 2017 is here and should be a year filled with opportunity for everyone in healthcare, including brokers. Here are 3 New Year’s resolutions that brokers can’t afford to miss in 2017:
Take advantage of regulatory uncertainty
Between the new administration, potential changes to existing healthcare legislation, and carrier mergers, the industry is bound to experience change in 2017. While for most in the healthcare industry, regulatory uncertainty is a hurdle, for brokers – it’s an opportunity.
In times of change and ambiguity, brokers become the source of experience in expertly guiding clients through the transition. In health insurance, regulatory uncertainty is when client prospects – especially those in small businesses – most reach out to an advisor to answer questions and help make their coverage decisions. Transitional periods are also opportunities to soothe the fears of existing clients and secure customer relationships long into the future.
Embrace digital technology
In 2017, health insurance decision support technologies will be ubiquitous. It’s no surprise, given just how tech-savvy and retail-oriented consumers have become, even in the healthcare industry. What does this mean for brokers? In order to secure long-term relationships and keep clients engaged, brokers must improve their digital shopping experience.
The difference now, however, is just how easy these tools have become to use. These tools are built to simplify the broker’s job, and as a result, are designed with ease-of-use as a top priority. Whether in the shopping and enrollment or benefits administration space, tools that are built to support the broker – rather than disintermediate the broker – will become the norm.
Support small businesses
As of January 1, employers with less than 50 full-time employees can fund Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) to pay for out-of-pocket costs and premiums for health insurance purchased on the individual market. Given that 40M Americans work in small businesses and only 30% of those receive employer-sponsored coverage, there is a huge population of companies that are simply looking for more affordable coverage options for their employees (Modern Healthcare, “Could a provision in the Cures Act help stabilize the ACA exchanges?” December 2016)
This bill gives brokers a chance to support small businesses that may want to transition employees to the individual marketplace. Following the passage of the HRA bill, brokers are needed more than ever before to educate small business owners on their cost savings opportunities. By staying up-to-date on the latest regulations and leverage the technologies described above, brokers can increase their reach across the small business landscape.