It’s been a perfect storm for agents and brokers selling health plans to small businesses, Florida’s economic lifeblood. The worst economic downturn since the great depression, the uncertainty of health care reform, and the ever-rising cost of care have converged to create a difficult selling landscape. There are emerging opportunities, however, that can help ease the strained small group sales environment. To benefit, brokers and agents need to understand these factors and communicate them effectively to current and prospective small group customers.
Premium Relief Is on the Way
When the cost of services and member utilization spiked a few years ago it was hard for pricing to keep up. That led to major rate increases and a very difficult market for agents. In Florida, we saw average premium increases of 15 percent and higher during 2009 and much of 2010. Many businesses began to drop health insurance as an employee benefit. Decreased employee enrollment also created a compliance dilemma, making it hard for agents to bring in new plan options from other carriers.
Today the underwriting cycle has shifted. Customer demand and pricing are no longer at opposite ends of the spectrum. Insurance carriers have a good idea of the group health landscape for the next two years in terms of plans and programs despite ongoing political maneuverings over health care reform. That means premium relief is on the way as prices stabilize and a flattening trend is predicted.
Blue Cross and Blue Shield of Florida (BCBSF), for example, foresees only single-digit rate increases on average for employers in 2011, consistent with the national trend of declining rate increases observed since a peak in 2002-2003. Premium increases averaged 6.9 percent in 2010, according to a national survey by Mercer, a benefits-consulting company. Nationally, premiums for employer-based plans are expected to increase by 6.4 percent in 2011, but only 6.1 percent in Florida.
Nationally, HMO enrollment has decreased from a high of 33 percent in 2001 to approximately 20 percent in 2010. Historically, HMO plans have faired well in Florida. According to Mercer’s most recent report, 33 percent of workers at 126 Florida companies surveyed were enrolled in HMOs in 2010. However, recent data also suggests that HMO enrollment is on a decline in Florida, dropping 10 percent between 2009 and 2010.
While some insurers are limiting the number of HMO plan choices they offer, at BCBSF we see this as a perfect opportunity to reinvigorate the small group market with greater managed care options. BCBSF is putting a renewed emphasis on offering competitively priced HMOs. The lower premiums of these HMO-style plans are designed to attract employees who might consider forgoing employer-offered insurance for a cheaper, less robust individual plan. That will help businesses meet the requirements for employee participation. These plans also will be an affordable alternative for small businesses who may have previously considered dropping their coverage.
The HMO model deserves another look in light of the industry’s growing focus on wellness and disease prevention. What once was seen as stifling consumer choice is now seen as a path to helping consumers make better health care decisions.
The major causes of premature death in the United States are related to poor lifestyle choices, such as smoking, sedentary behavior, and over-eating. More than 26 percent of Americans are obese, directly contributing to the increased incidence of diabetes, heart disease, high blood pressure, and joint problems. Obesity alone accounts for nearly 10 percent of U.S. medical spending, reports the Centers for Disease Control and Prevention.
The majority of health care cost is attributed to four to five core chronic conditions, and most are preventable through changes in improved health care choices and a focus on primary care. The valuable role of primary care, rooted in HMO plans, is supported by the industrywide trend toward patient centered medical homes (PCMH). The underlining principle of the PCMH is the “ongoing relationship with a personal physician trained to provide first contact, continuous and comprehensive care,” according to the Patient Centered Primary Care Collaborative. These primary care providers are responsible for providing for all of the patient’s health care needs or taking responsibility for appropriately arranging care with other qualified professionals.
A growing industry-wide focus on consumer empowerment has led to the proliferation of tools to aid consumers in making better choices with the ultimate goal of cost containment. Many government agencies and organizations, as well as some health insurance carriers, are aggregating cost and quality data, giving consumers the opportunity to make educated health care decisions.
BCBSF has partnered with WebMD to offer members a broad set of personalized tools specifically created for their use. These tools allow users to explore the benefits of wellness and prevention and the value of being cost-conscious when it comes to pursuing quality care. For example, WebMD Personal Health Assessment encourages BCBSF members to measure their own health status quickly and easily online, and to take further steps to actively monitor and improve their health.
BCBSF also offers its members the Care Comparison tool, which provides cost and quality information for elective procedures. Members can access this tool online or review the information with a nurse over the phone or in person at Florida Blue Retail Centers throughout the state. With this information, members can make informed decisions about the most appropriate site of service for their elective procedure from both a cost and quality perspective. This can have a positive impact on members’ out-of-pocket expense, particularly when they are enrolled in an HMO plan.
Becoming a Client Advocate
As Florida agents diversify their portfolios to adjust to market conditions, they should not abandon the small group market. Health plans have gotten very complex, and agents and brokers play an important role in educating their clients about the changes and opportunities ahead. Agents who can help employers and their employees take advantage of tools and information to maximize their benefits and minimize the cost are well positioned for riding out the storm. Those who go the extra mile to become resourceful client advocates — empowering them to become smart health plan consumers — will succeed in this tough business environment and prosper even more as the market recovers.