Tom Harte started in the insurance business in 1989 at The Prudential. In 1997, he opened his own business, Landmark Benefits in Hampstead, N.H., where he provides benefits to a range of employers, from small businesses to companies with 1,000 employees or more. He remains the only producer at the company and he employs 14 account staff members, something that he says gives him a lot of satisfaction because it allows for excellence in customer service. Involved with the National Association of Health Underwriters since 1996, Harte is the organization’s new president. EBA spoke with him about his new role.

EBA: What are your goals for the year?

Harte: Well first of all, my platform has always been health care affordability and accessibility. So a lot of what I’ve talked about since 1996, but more specifically since I became secretary of NAHU, is talking about tools and resources as it relates to wellness programs. What I know is this: 70% of the cost of health care comes from preventable health conditions. So in my own home town with those clients that we serve every day, we are working to implement programs to reduce the utilization on the health insurance plans. Our programs have had overwhelming positive effects on reducing health care premiums. We also work a lot on health care cost transparency so that consumers have access to the data so they can make the best and most informed decisions of where they should be accessing their care.

So as the president of NAHU, I’m working on implementing tools that our members have access to [for these issues]. The challenge is that there is a lot of resistance from the provider side — they don’t want to release that [cost] information. But it’s never made any sense to me that it’s really the only marketplace where you can’t shop for services. Ultimately, if you have a co-pay plan for an office visit, it doesn’t matter who you go to, you’re going to have the same $25 co-pay, regardless if you go to a physician who charges more or who has a higher quality or lower quality … and that’s something that NAHU quite frankly has to become engaged in more significantly if we’re going to have a positive impact on the cost of health care.

Goals are tricky, they’re tricky for anybody, but ultimately I picked a goal for NAHU that doesn’t necessarily represent what I would like to see from an idealist standpoint but rather, by increasing our membership from where it is today from just 19,000 to 20,000, which really we haven’t seen since May 2008. Ultimately, for me as a president of NAHU, I want to be able to deliver comprehensive tools to our members so they can be more productive, they can be more successful, more efficient in their business. And in my 21 years in this business I know that one thing’s for certain — the role of the employee benefit broker has been transformative during those 20 years.

Back in 1997, my agency was providing COBRA continuation for our employer clients and then we got into the website business, well today, my company — much like most brokers today — they don’t just sell insurance, they manage benefits. And a lot of our work today is on compliance and the issue is for the small agencies out there, the one, two, three-person shops, they don’t have access to the financial resources like my company so they can purchase these comprehensive software platforms to make sure that their clients compliant. Things like filing 5500s, all the ERISA requirements, GINA notices …

Today, NAHU is delivering compliance tools, a compliance corner on our website that our members have access to. And it’s good it just needs to be five times stronger. For brokers to set themselves apart, they need to have access to these things.

EBA: What is your goal for increasing membership?

Harte: For years our membership has been declining, since 2008 we’ve been falling a little bit every year. But since then we’ve had brokers coming to NAHU for a couple reasons, a lot of brokers were counting on the Supreme Court to consider health reform unconstitutional, then a lot of brokers were counting on the presidential election to change things … So now we have brokers coming to NAHU in droves and they realize — ‘it’s up to me’ — ACA is here to stay. They realize, ‘I need to a strong advocate and NAHU is my partner.’ The other side of it is, on the health care reform side, benefit brokers need to understand the law better than anyone else — better than the media and insurers.

So the health care reform certification program through NAHU is the most comprehensive in the marketplace. And so far we have approximately 2,000 enrolled in the program and 900 have already graduated. I say this pitch all the time, but for brokers, in your own marketplace less than 1% of the brokers are certified for health reform. And if you want to differentiate yourself, this is the best way to do it, especially in an environment where most of employers are fearful of health reform and they’re looking for partners who are educated and professional and can best represent them during these challenging times. It is very affordable. The way I look at it is that every dollar I spend as a broker is an investment in my practice and the $500 or so that you would spend for health care reform certification will pay an agency huge dividends, because employers are looking for those who are certified.

EBA: What was the reason for the decline in membership in 2008?

Harte: The economy definitely had a role to play. There’s been a tremendous amount of fear out there about the business, some have simply left the business and some have retired, so as a result of those issues we’ve seen a decrease. But NAHU has historically only represented the best of the best in the employee benefit business. The top 20% have always been members of NAHU. Now we’re starting to see some of the people on the sidelines starting to come in, because without a strong partner like NAHU they will be left behind.

EBA: Can you quantify the total number of brokers in the U.S.?

Harte: It’s almost impossible. I know I speak in generalities when I say it’s the top 20% who are members of NAHU. I know back home in our state we have about 70 members in New Hampshire and I know that there are approximately about 250 brokers in the state. I recognize that New Hampshire is a very small representation of our membership in NAHU, but I think it’s a fair representation to give an idea of what we see across the country.

EBA: What are your thoughts on health care costs?

Harte: Well, as it relates to health care cost transparency, I did a video … about specific examples in my own home state of New Hampshire where we looked at tests that are being done — CAT scans, MRIs, natural childbirth, C-sections — and we looked at the alarming difference in reimbursements between providers. I often talk about how a CT scan of your head, from the least expensive hospital in New Hampshire to the most expensive hospital in New Hampshire, is 446%. So the issue is that a consumer is accessing those services without any additional expense to them. So I really believe that in the absence of comprehensive transparency tools that the marketplace — the insurers themselves — have to develop their products so that they are pushing on the additional costs to the consumers so that they continue to make that choice. And that’s me, that’s not necessarily NAHU, but that’s the problem in our marketplace, that there’s so much cost being wasted because consumers don’t have access to that information.

EBA: What do you think is the likelihood of the MLR bill passing, and how will you feel if it doesn’t pass?

Harte: Well, the chatter in Washington is that there’s a lot of support behind it. When NAHU first advanced that bill through the process [last session] there were over 200 co-sponsors in the House but it didn’t pass the first time around. When Senator Landrieu (D-La.) introduced the bill again in the Senate [this session] it again has bi-partisan support. What we’ve heard through the halls of Washington is that the Senate majority leader [Sen. Harry Reid (D-Nev.)] is supportive of the MLR bill right now. I can’t speak for him of course, I’ve only heard this. So, I’m optimistic. I’m optimistic the MLR bill will move forward and I don’t just think that because brokers are letting their voices be heard, but because it makes sense …

You can’t really look at brokers as an administrative expense. Ultimately, Washington is setting up health care reform so they can create these new occupations of navigators and consumer assisters, and all along those roles have been played by the employee benefit broker. So putting an employee benefit broker in an administrative expense isn’t really a fair representation of what employee benefit brokers do every day.

EBA: What’s your perspective on how brokers and employers are prepared for ACA implementation?

Harte: Each state will have a different experience. In my home state we are a modified community rating state and we have age bands of 4:1. Of course, the ACA mandates a 3:1. We’ve already seen our small group forecast of renewals for December 2013 and January, 2014 and our rate corridors for our clients is that they’re either experiencing a 40% reduction or 40% increase. Conversely, when we look at states like North Carolina, which is a medical underwriting state with a plus-or-minus 25% increase based upon their medical history, with that particular formula … they have a 66% swing from the least expensive group to the most expensive group. So automatically your healthiest group will get a 66% increase or more because of the rate compression or age.

So in answer to your original question, every broker in every state will need to make decisions based on how it’s transforming their industry. Some small business [focused] brokers, who primarily take care of groups with employees from one to 10, are considering just partnering with their exchange, and in other states they’ll say, ‘Well, we don’t have our exchange set up, so we don’t know if we’re in or we’re out.’

EBA:  Where do you see this industry five years from now?

Harte: It is my expectation that the private health care system is here to stay. It is the American way — the free marketplace will have to dominate. The thing is, on the health care side, we have to allow the health care industry to become a marketplace where it can become competitive, where people can pick and choose their doctors and hospitals based on quality outcomes and pricing.

The role of the employee benefit broker will become ever more important five years from now than it is today. The fact is, 15 years ago their role was fairly easy, you sold insurance, you dealt with a couple of claims and took care of the renewals and open enrollment. Today, it’s so much more sophisticated and complicated with compliance and wellness, on-boarding, off-boarding, enrollment technology, ERISA requirements … and my expectation is there’s only going to be more responsibility. How they’re going to be compensated? I know there’s some discussion about moving to a fee-based practice. We’re not seeing that that has become a prominent solution yet … but I think it’s an easy conclusion that the evolution of compensation will be more toward a fee-based system.  EBA


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