Health care reform has been good for business - true or false?

These days, it still depends on whom you ask. Ask a producer who sells critical care insurance, though, and the answer you'll probably get is "true."

At AlwaysCare Benefits, for example, they "have definitely seen more interest" in their CI product as a result of health care reform, reports Joe Wieser, vice president of product development and enrollment services. Toward the latter part of last year, Wieser says - that is, during open enrollment season - the carrier saw "quite a bit of interest" from employers as they reevaluated their medical plan options. During that process, he believes, employers were confronting substantial increases in premium, and perhaps even providing less value to their employees in terms of plan designs and benefit offerings.

"With health care reform, we're seeing more and more brokers who don't traditionally sell these types of products," says Wieser, who is responsible for the carrier's group CI product.

Today, however, they're more interested. "We had tremendous interest from brokers in terms of quote activity with CI because they wanted to provide other solutions," says Wieser. "I think part of those solutions have to do with any lump-sum cash benefit option that's available. I think for the first time I'm seeing more of a need from employers saying, 'What other solutions do we have here?'"

At AlwaysCare, this resulted in higher quote activity and more sales - a significant improvement over 2008 and 2009, Wieser reports.

Lydia Jilek, a CI product and market development director at Unum, agrees. "One of the things we have definitely seen is that PPACA is likely to have an upward pressure on premium rates across the country as a result of a number of its mandates," she says.

Jilek cites a Congressional Budget Office estimate that the law will raise employers' health care costs in the range of 0.5% to 2% annually. "But what we're really seeing is that those increases are going to vary, but can in some instances be north of 4%," Jilek reports.

This increase is above and beyond the medical trend increases employers are seeing. Thus, says Jilek, in a time of financial difficulty for many employers because of the recession, "really we have the perfect storm."

 

CDHP fill-in role

The question then becomes, as employers continue to modify their benefit offerings, will they be able to continue to offer their employees the benefits they feel are valuable? At Unum, Jilek reports, they're seeing a lot of employers moving to high-deductible health plans - either with a spending account or on a standalone basis.

About 61% of Unum's clients are now offering consumer-directed health plans, she says. Looking to the future, 79% of employers expect to offer account-based health plans by 2013, an recent Unum white paper reported.

As employers raise deductibles in an effort to maintain their current benefit offerings, Jilek observes, employees "are definitely experiencing an increase in their potential liability." In many instances employees will not have enough funds in their accounts or reimbursement arrangement to cover those high deductibles. That's where a CI product can help, by filling in those shortfalls.

This is an important point for people to focus on, Jilek notes.

CI products "are designed to help people pay their mortgage, their rent, their car payments," she says - at a time in their lives when they're seeing an increase in medical costs as a result of their medical condition and probably a decrease in their earnings as well.

Even with a strong disability program, she points out, individuals are really only seeing only a 66% or 70% income replacement, while their cost of living is not likely decrease, and may actually increase in some instances.

 

Wellness screening and tests

PPACA's provisions fostering wellness incentives are boosting interest in CI products as well.

Under the law, annual preventative checkups and tests are now covered at 100%. This makes an offering like a health screening more attractive to employees, Wieser notes.

"It's like a quick return of premium back in their pocket on an annual basis, for either them or for their spouse," he says.

Under its "Express Wellness," Unum allows wellness screenings that are conducted during employers' benefit fairs to be used for that first year's wellness benefit.

"If they have a blood test - usually a cholesterol test or a blood sugar test - at a benefits fair, they will be able to use that right away," Jilek explains. "It gets people to really see a tangible benefit from their product right away instead of having to wait for that PSA test or a mammogram later in their first year."

A wellness screening benefit is just one of a host of new value-added services being added to carriers' CI products. Some, for example, are adding a support network by enlisting partners such as Lance Armstrong's LiveStrong program, Jilek observes.

"We've also seen the rollout of Best Doctors with some carriers," Jilek says.

The newest of these value-adds may be the addition of robust health advocacy programs. AlwaysCare's health advocacy program is "another way we give something back to employees," Wieser notes. AlwaysCare's program is very similar to an EAP. An employee has 24/7 access to a personal assistant who handles questions and requests - for example, finding a hotel near a treatment facility in another location, providing referrals to physicians or other providers, helping sort out EOBs from the medical carrier, etc. They also help with post-care issues like rehabilitation services, modifications to the home, and finding child care.

 

Recession's impact

CI products are also benefiting from a heightened interest in ancillary benefits resulting from today's economic conditions.

"As an industry we've seen that during this recession you would intuitively expect that people would see that they have less disposable income and would likely spend less of their paychecks on flexible spending accounts, voluntary benefits and things that are going to impact their take-home pay, says Jilek. "However, what we're actually seeing is the participation rates across the board, including CI, are actually increasing year over year."

Since Unum rolled out their group CI product just a little over a year ago, Jilek reports, they've seen a "strong increase" in the year-over-year sales numbers for their CI portfolio.

 

Emphasis on educating brokers

To sell CI, says Wieser, "You need to understand the value and the need, and you need to know how to present that to the employee. So we're working to educate these brokers first and foremost - it's different than selling health, or dental, or disability."

Similarly, at Unum, "We're trying to position ourselves as a communicator about the different strategies that are available to brokers," says Jilek.

While it has yet to be determined what all of PPACA's impacts will be, Weiser notes, "the need for employers to continue to offer different types of ancillary benefits to their employees will continue to be front and center."

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