With President Barack Obama's re-election bringing an end to any meaningful near-term attempts to overturn health care reform, the industry must prepare for a compliance-heavy year ahead with clients, and plan for internal change as well.
Many employers had been waiting for the Supreme Court's June decision on the constitutionality of the Patient Protection and Affordable Care Act before working on a strategy for compliance - and a July Mercer survey found an additional 16% were waiting until after the presidential election to take action.
Michael Wilson, CEO of the International Foundation of Employee Benefit Plans, says many of IFEBP's members felt the same way. "Even after this summer's Supreme Court ruling, many of our members were still awaiting the outcome of this general election before they addressed health care reform," he adds. "We are still at the beginning of the process, much like when ERISA was enacted in 1974. I would expect the health care law to undergo the same process of review and implementation and we will probably still be working to adjust the ACA in 30 years."
Consultant Ron Leopold believes the same waiting game held true for many brokers and consultants.
"The way I describe it is it's like we fell asleep on a train," he says. "So the train has continued to move in terms of a timeline, and all of a sudden we've woken up and we realize we have a lot to do and prepare for before we get to the end station."
Obama's win means the time to get clients ready for PPACA is now. "So I think we're going to see brokers and consultants start accelerating their educational efforts for clients about what needs to happen," says Leopold. "I think employers are going to be a lot more interested in those messages."
Expect those messages to come in the form of a fee-for-service business model, adds Nelson Griswold, president of Bottom Line Solutions, who agrees that many agencies were waiting until after the election to think about the feasibility of their business model under PPACA.
"Dramatic change is going to be required for agencies to survive and thrive going forward. That's the bad news," says Griswold. "The good news is for those agencies that will change ... in the right away are going to be able to capitalize on all of the opportunities that are going to be created both by PPACA and the demise of a lot of their competition."
Bye bye brokerage?
That demise will be directly attributed to health reform, predicts Craig Davidson, founder of futureofficenetwork.com and mysalesrockstar.com - a "death by 1,000 cuts," he says.
Many brokers still don't get it, he adds, and it's time for some self-analyzing.
"What do you need this guy versus that guy for? What is the purpose of the broker? The brokers are going to have to really say, 'I've never been faced with such a game-changer before. What am I going to do to show to my customers that I really am still relevant?' That is a big issue," says Davidson. "The days of fat and happy are gone."
Shocked at the election's outcome, Tinker Kelly, president, Voluntary Employee Benefit Advisors, still has a positive outlook for the future of the industry. "Substantial change creates opportunity. I'll go to my grave on that," he says. "Now, who's going to win and who's going to lose; only time will tell."
Because health care reform failed to focus on cost containment, Kelly predicts the cost of health care will skyrocket under PPACA. "Which means plan design changes - and it's not going to be consumer-friendly," he says. "I think you're going to see a whole lot of high deductible plans."
However, this will create a lot of opportunity for the benefits business - particularly voluntary, adds Kelly. "For entrepreneurial insurance people that are willing to understand the changes and be in a position to deliver new services to their clients and to the market in general it's got the potential to be a bonanza," he says. "A real game-changer."
In contrast to Kelly's view, the election results were no surprise to Thom Mangan, CEO of United Benefit Advisors, who never thought Obama would lose. It's not time for panic, he says, but Mangan does predict that the capital gains tax will go up by January 1, which means many mergers and acquisitions this month. "In speaking with the consultants ... they have almost a deal a day going with small health insurance brokers," he says.
Susan Combs, president of Combs & Company in New York City, anticipates a lot of brokers will look into getting other certifications, like a property and casualty license, in the wake of the election and because of the direction the business is headed in general. "People are going to start looking for other avenues because I think health insurance is going to eventually become a fee-for-service," she says.
Regardless of compensation method, Jessica Waltman, SVP of Government Relations with the National Association of Health Underwriters, is optimistic about the future and the value that a broker or consultant brings to the table. "We want to continue to urge our brokers to work with their clients to help them develop clear health care solutions for the years ahead as we work to implement the health care reform law," she says.
Adds Waltman, "This is a great opportunity for brokers to show their clients value, to provide them with compliance information and support."
Congressional action
While disappointed in the outcome of the election, Combs points to the fact that the House and Senate still being divided means who is president has less of an impact on the future of health reform than some were hoping it would. "I really don't think that whoever was elected president was really going to change that much since there's still that gridlock and deadlock with the House and the Senate," she says. "I don't think enough people were brought in that are really going to be game-changers who are a little bit more open-minded."
Meanwhile, Mangan hopes that because exit polling indicated that the majority of people want to keep or even expand PPACA that Congress will take a closer look at improving the law. "It's my hope that they will start working together to make the plan more palatable and actually budgetable," he says.
The election results - 51% of the popular vote going to Obama, 48% to Gov. Mitt Romney - show a still sharply divided America, says National Association of Insurance and Financial Advisors President Robert O. Smith, who also wants to see legislative action to make improvements to health reform. "We have been vocal in our desire for modifications to the new health care law to better serve middle America," he says. "We are eager to work with the administration and Congress in a nonpartisan manner to develop workable policies and legislative solutions."
While the president's re-election removed the chance that Congress will repeal PPACA, it likely won't stop the House from continuing to try to pass legislation to slow down the law, predicts Rob Lieblein, executive vice president, MarshBerry. "I think you'll still have people that try to challenge the legality of it, but for the most part the president will move forward with the assumption that the law will be fully implemented," he says. "The positive of that is I think with the threat of repeal being taken away I think you'll see some flexibility by the administration [on] implementation deadlines."
The closeness of the election means "if there's any mandate for the White House and for Congress it's that the country really wants us to be working together because we are so divided about these issues," says Jill Hoffman, VP of federal government relations at NAIFA.
In fact, Lieblein believes carriers are, to a certain extent, relieved that the law will be moving forward, due to the amount of work they have done since its March 2010 passing. States, on the other hand - particularly ones run by Republican governors - have a lot of work to do to get PPACA's required exchanges up and ready by January 2014.
But, Lieblein wouldn't be surprised if that implementation date was set back. "Health and Human Services has a tremendous amount of work to do as far as rules and regulations to actually get things up and running, according to their own timetables, so it would not surprise me at all if the deadline for state exchanges got pushed back one way or another," he says. "I'm cautiously optimistic that people will try to work together a little better, recognizing that it's not just something that's going to be thrown out by the House and Senate."
With the lame duck session, Waltman doesn't expect much action on legislation currently stalled in the Senate that would fix the medical loss ratio provision of PPACA, but is optimistic Congress will revisit the issue. "We continue to work on our bi-partisan legislation," she says.
Brian M. Kalish contributed to this report.
