The traditional model of the benefits brokerage is terminal and on life support. As I talk with brokers and consult with agencies across the U.S., there's a growing desperation as they realize that "carrying quotes" isn't enough anymore. Even modifying the plan design and then shopping the medical for the lowest quotes no longer will get - or keep - the account.
In so many states now there just isn't that much shopping required. With fewer carriers in the marketplace and with the new PPACA coverage mandates added to state-level mandates, a broker's carrier and plan options are much more limited.
A broker from Georgia recently expressed his frustration to me over his lack of options: "There's no other way to save people money with medical. You can't compete on price." Not only is he right about health plans, selling on price is just a race to the bottom anyway and establishes your relationship with the client as merely transactional.
It's why brokers so often find keeping the AOR/BOR is like trying to hold on to a greased pig. Since price is too often the determining factor, employers have found it easy to change out transactional agents. Brokers must stop the transactional selling.
Lower benefit costs are important to the client, of course. Employers are desperate, however, for a long-term solution to their benefits dilemma, not just a one-year fix that never addresses the core problems behind spiraling costs. For years the goal has been containing costs, not changing the underlying circumstances but merely attempting to maintain the pricing status quo. Not only has this containment strategy failed, it has cost us valuable time in the search for a permanent, long-term solution. What employers want and need are strategies for a sustainable benefits plan.
Move the discussion from price
This is where the progressive broker can move the discussion away from price, to both differentiate him or herself and provide meaningful value that locks in the account.
The opportunity is to provide results-oriented strategies to help clients create benefits plans that are sustainable over the long term.
Employers are hungry for guidance and direction on benefits that can provide a long-term solution to unsustainable cost increases and productivity-sapping cost shifting.
My most valuable nugget this month: Employers are eager for a broker who will drive their benefits strategy. For too long, benefits strategy has been like a Chinese fire drill. Rarely has anyone been willing to get behind the steering wheel and drive the strategy. There has been little or no positive action to improve long-term prospects, only panicked reaction to high renewals in order to manage short-term costs.
Holistic and aggressive
The most progressive brokers are taking a very holistic view of benefits strategy. They are looking at employee benefits from 10,000 feet and incorporating all stakeholders - employers, employees, providers and carriers. These strategies are aggressively proactive. In creating a sustainable benefits plan, employers can't afford the passivity of, "We hope you will enroll in our high-deductible HSA option" or, "We're creating a wellness culture and hope you will join us."
As a U.S. Army saying puts it, "Hope is not a strategy." Success requires treating health care and employee health with the same aggressiveness that companies currently employ with other major risk and cost centers such as workers' comp and data security.
I've identified three visionary benefits strategies that can stand alone or, for maximum results, be integrated into a single grand strategy to create a truly sustainable employee benefits plan:
1) Bending the cost curve
2) Managing the health trend
3) Benefits strategic planning
Bending the cost curve
The first order of business for the employer is to regain some immediate control over health costs and bend the benefits cost curve at least flat and, ideally, downward. Most strategies to bend the cost curve combine consumer-driven plans with workplace voluntary benefits.
Consumer-driven plans can provide both short-term premium savings and the longer-term savings from increased employee engagement in health care funding decisions.
The challenge is to deploy an aggressive high-deductible plan without creating unmanageable employee pushback and hurting morale. Brokers on the cutting-edge of this approach are leveraging the power of voluntary benefits to develop innovative plan designs.
Managing the health trend
The most sophisticated benefit strategies are addressing not just costs but cost drivers. Brokers are showing CEOs and CFOs how to use hard data to measure and manage their employees' health trend. Deploying advanced techniques including predictive modeling and risk stratification, employers now are able to identify and forcefully address major employee health risk factors.
When armed with real numbers about their employees' health and its impact on health care costs and productivity, company executives are supporting aggressive strategies around results-based wellness programs, employee incentives, targeted health interventions and premium contributions based on a health risk score per the HIPAA final regulations.
No longer are these employers at the mercy of their employees and insurance carriers when it comes to health care costs. These strategies allow employers to seize control of the employee health trend and manage it with intentional and proven techniques. They have produced dramatic results, including reduced benefit costs and improved employee health.
Benefits strategic planning
Employee benefits represent the single largest investment/cost center for many employers.
Yet, while almost all companies operate from a detailed, long-range strategic plan, most employee benefits decisions are made year to year at best - sometimes minute to minute - in a style best described as "management by crisis."
While the owner, CEO or CFO oversees the company strategic plan, in most companies no one looks at benefits strategically.
This is one primary reason that HR rarely is considered a strategic partner by management. The failure to strategically plan around benefits and their cost impact excludes many HR professionals from the ranks of management decision makers.
Forward-thinking brokers are empowering their HR clients and engaging CEOs and CFOs by introducing and leading the development of a long-range benefits strategic plan that integrates into the overall business strategic plan.
Not only do these brokers help develop contingency plans in case of a high renewal, they build new products into the benefits plan. With this process, they become a strategic partner and write themselves into the plan for its three- or five-year duration.
Critical roles for voluntary
Voluntary health benefits are playing key roles in these strategies.
Workplace voluntary benefits are being used to help employees insure against a high deductible, to help employers maintain employee morale when moving exclusively to an HD plan, to help employers manage employee health risks, and as a funding mechanism for critical components of the health trend management strategy. As voluntary helps you drive the benefits strategy, it generates meaningful new commissions.
Regardless of the specific strategy you use, your opportunity is to grab the wheel and begin to drive your clients' benefit strategy.
With the future role of brokers in doubt due to the national health care law and with health commissions at risk from carriers beginning the move to a fee-for-service model, now is the time to add truly meaningful value to your client services.
In coming months, we will look more in depth at each of the three key benefits strategies I've outlined. Next month, I'll take a look at how the most innovative brokers are driving the benefits strategy to bend their client's health cost curve downward.
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