The benefit agent’s role is vastly different from what it was just a few years ago. Brokers and agents are required to be more dedicated and creative than ever. Because employers must remain competitive to attract and maintain valued employees, they are looking to their benefit specialists for new and creative answers. Employer clients are struggling to find new ways to cut costs while offering satisfying benefit packages, even if it means looking elsewhere for benefit administration or advice.
The Changing Role of the Agent
In years past, it was not difficult for health care brokers and agents to maintain a relatively satisfied and stable client base. Many brokers founded their businesses by primarily promoting health benefits, and held a consistent client base on that alone. Staying in contact with customers and offering satisfactory service and support was usually enough to ensure that a book of business was reasonably safe.
Employers Must Change, Too
Understandably, over the past several years employers’ primary focus has shifted to the recession and the difficult business climate at hand. With increased attention being placed on expense control, business retention, and cost shifting, employee satisfaction has not been an immediate focus for many employers. With the decreasing economy came fewer open employment positions and therefore fewer voluntary resignations. The perception was that employees were simply grateful to have a job.
Employers, many of whom have relied on the one-plan-fits-all approach to employee benefits, are now finding it necessary to make substantial changes. Due in part to escalating health care costs and the recession’s impact on employees and employers, agents are now tasked with creating strategies to replace the standard benefit package. This new approach must be one of choice and flexibility, where benefits can be an effective tool for re-establishing satisfaction and loyalty among employees. The MetLife study found that employees who are satisfied with the benefits offered by their employer are nearly three times as likely to express a strong sense of loyalty to their employers.
While nearly all workers have been impacted in some part by the recession, their financial and benefit needs, views and priorities differ greatly, due in part to age, behavior, and life management styles. This can translate into workers having vastly different feelings toward benefit offerings. To remedy the inflexibility of the single-offering benefit package, employers need to offer a variety of products and services that satisfy a diverse employee base while staying within employer and employee budget constraints.
Medical Trend Plays a Part
Based on surveys and interviews conducted nationally with health plan executives and employers, as well as extensive reviews of hospital-based health plans and analyst reports, PricewaterhouseCoopers’ (PwC) Health Research Institute estimates that the national medical growth trend is expected to decrease from 9.5 percent in 2010 to 9 percent in 2011. Looking closer to home, renewals received from the Blue Cross and Blue Shield of Florida small business segment are currently reflecting medical trend at 11 percent, unchanged from last year.
The biggest inflators of the medical trend based on PwC’s report will be in provider costs, which make up 81 percent of the medical benefit:
- Cost-shifting from Medicare is expected to increase as hospitals see their rates cut for the first time after seven years of increases that nearly matched or exceeded inflation increases.
- Provider consolidation is increasing, which is expected to increase their bargaining power. The number of physicians involved in mergers or acquisitions in 2009 was 2,910, nearly twice that of 2008. In addition, 2010 has seen record activity. Payment changes, embedded in the federal health reform law, also encourage models that align financial incentives among providers.
- Spurred by stimulus funding that begins in 2011 and Medicare penalties that begin in 2015, hospitals will invest billions of dollars into certified electronic health record (EHR) systems. While many hospital systems were planning to implement EHRs soon, the government’s new regulations dramatically condensed their timelines to invest in technology, IT staff, training, and process redesign. Health care CIOs surveyed by PwC said they will make their largest investments to meet the new EHR regulations in 2011.
Changes in benefits are dictating that employees become more engaged in their own health and wellbeing. With more employers transitioning to high deductible health plans, and traditional PPO and POS plans shifting from co-pays to co-insurance, employees are taking on additional financial responsibility for their health.
Because of these cost-sharing features, employees must evaluate how they use their benefits and become more engaged in efforts to improve their health and reduce unnecessary utilization.
Education and Communication Are Key
Education and communication are significant components of a successful benefit package. With the implementation of more diverse benefit offerings, education and communication become even more important. A thoughtfully comprised offering will only be as successful as it is understood and utilized by its participants.