I don’t want to start out this blog by offending insurance brokers; they’re an adaptive bunch, particularly with all the challenges thrown their way in the past few years. And the industry certainly has changed: nowadays, group health brokers offer all sorts of value-added services and solutions to their clients to try and differentiate from the guy down the street.
That’s all well and good, and does help the client, but what I want to explore is the core of the broker-client relationship. Plan design. Health plan design itself has evolved quite a bit in the past few decades, particularly recently, but the vast majority of brokers are still presenting plans the same way they did 20 years ago.
A brief history of group health plan design
An exhaustive history of plan design would be far too long for this blog, so I’ll share a snapshot of how we got to where we are today.
Pre-1990: The majority of group health plans were indemnity plans, making a broker’s job pretty straightforward.
1990s: During this decade, a shift began to other plans such as HMO, PPO and POS (point of service) plans. This diversified the plan market, but these were still pretty basic options for brokers to present to clients using a standard spreadsheet and binder approach.
2000s: Plans began getting much more complicated as consumer-directed health plans emerged and began to gain popularity as a mechanism to managing ballooning health care costs. Brokers are still presenting these more complex plan options via spreadsheet.
Today, plan design is even more complex because there are so many options available as costs continue to skyrocket. Consumer-directed health plans, value-based plans, self-funded vs fully insured plans, defined contribution vs defined benefit plans.
Then bring in the monstrosity that is health care reform and all the new regulations employers need to comply with. Should I explore a private exchange? How do I avoid the Cadillac tax? How many full-time equivalent employees do I have?
Still, the vast majority of brokers haven’t changed how they conduct the annual renewal and present plan options.
What does this mean for brokers and employers?
Now, imagine, as an employer, being presenting these various options in three-ring binder, full of multiple spreadsheets and tons of data. How can an employer possibly make informed decisions when they are overwhelmed with numbers? For each alternative plan, they want to know:
How will Plan X affect our bottom line?
Will employees pay more in premium for Plan X?
Will employees pay more out-of-pocket for Plan X?
Plus, they’ll likely want to make some alterations. What if we try an HSA? Would it save money to increase the deductible? How would that impact our employees? Etc.
And those questions all mean that the broker needs to go back to the office, create more spreadsheets to model those scenarios, and schedule another meeting to discuss. And repeat as necessary.
I don’t know about you, but this doesn’t sound terribly efficient to me. If I was an HR manager or CFO, I’d want a better process. We know that brokers have the expertise to advise us on this essential conversation, so why not simplify the back-and-forth?
I’d love to hear your opinion in the comments section; share your thoughts below!
To learn about brokers who are presenting plans in a modern way, download the e-book, What Employers Want: The Case for Dynamic Plan Design.