I’m predicting several changes in the benefits brokerage and healthcare industries, including commission cuts and more technology utilization, which will require advisers to adjust their business strategy. My business partner and I think the opportunities ahead are much greater than at any time in the past. Yet, I see many people acting as if nothing has changed. It seems like the whole world thinks A and I think B.

To paraphrase my favorite Ben Franklin quote: “If everyone is thinking the same thing, then nobody is thinking.”

I have predicted the following seven changes in the benefits brokerage and health care business:

  1. HRIS/benefit technologies without payroll will become obsolete.
  2. The majority of employers with fewer than 100 employees will look for a single-source technology and services solution in the future.
  3. There will be dozens of Zenefits-like companies in the market within six months.
  4. Small-group health insurance commissions will be 50% of what they are today by 2017.
  5. Employers will be out of the health risk business within 3-5 years.
  6. Most health insurance will be individually purchased within 3-5 years.
  7. Provider systems will dominate the health insurance market in 5-10 years.

Find details of these predictions here.

While these are beliefs of my mine based on my own experiences, my partner and I did do some research before making the decision to change (let me say enhance) our business strategy. My ideas were validated by several sources, including:

  • I spoke to a venture capitalist who is investing in the HR technology space who tells me that they are primarily looking to invest in HR-type companies that are also going after the benefits commission. The commission drives the revenue, but the HR technology/service would drive the differentiation.
  • A recent human capital management industry study by George LaRocque and Steve Smith of The Starr Conspiracy says:

1) There will be disintermediation in the benefits broker model — expect the roughest fight to be here. Because of the benefits component, there’s a ton of revenue out there for companies to grab. Expect more companies to go out there and grab it.

2) HCM companies that deliver only point solutions are vulnerable to disintermediation. Now, there’s the push toward “one desktop” — a holistic work experience. The thinking is that an HR system shouldn’t be somewhere you go. It should be a seamless part of your daily user experience as an employee.

3) A sea change is underway in how employees get benefits coverage. This is the change that no one is talking about — yet.

"There is a lot of information out there and if the majority is saying the same thing then most people feel uncomfortable thinking the majority is wrong."

4) HCM market leaders will grow 50% to 200% year over year. We believe the benefits component is the fuel for the growth.

  • A representative from a local hospital system getting into the insurance business stated to me, “There will be no Blue Cross version of us in 5-10 years.”
  • And how about this — A broker proposal showing the cost of the following services for an employer:

Accountant: $150 – $300/hour

Attorney: $200 – $500/hour

Benefit broker: $600 – $1,000/hour

This broker’s fee: $250/hour.

If you are a benefit broker and look at the above comments and my predictions, you may feel uncomfortable. I sure do, because my business to this point has been built on the current industry model.

In the past, I have said that changes to the benefits world are coming. First to broker distribution, followed by big changes to the healthcare market. I now say the changes are here. The horse is out of the barn and it is not coming back. And from my seat, almost everyone in the business that I speak with doesn’t see this coming. Or they say they see the changes coming, but after speaking with them I think most are misreading the market. Admittedly, all of this is self-serving, as my partner and I have placed our bets that the market has changed.

This is somewhat a study of human behavior. In this information age it is really easy to influence behavior. There is a lot of information out there and if the majority is saying the same thing then most people feel uncomfortable thinking the majority is wrong. But then again, maybe nobody is really thinking at all.

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