Tag Archives: health insurance broker

The State of the Nation’s Private Employer Exchanges: Crazy!

I’m not talking Patsy Cline’s “Crazy” or even Gnarls Barkley’s “Crazy”—I’m talking Peter-Frampton-re-release-the-same-song-and-get-totally-different-results kind of crazy!  In 1975, Frampton released “Show Me the Way” on his album Frampton, and no one cared.  The song was re-released in 1976 on the album Frampton Comes Alive—and topped the charts in both the U.S. and U.K. In Wayne’s World, the song was described as “required listening for all suburbia.”  It’s all marketing, baby!

What does this have to do with private exchanges? Most are just a re-release of technology that has been part of benefits administration enrollment for years.

The following is a short list of “new” capabilities and requirements that are typical for a private exchange:

  • Defined employer contribution, instead of defined benefit.
  • The ability to connect electronically to insurance carriers.
  • Decision support tools, to help determine employees’ best options.
  • Support for core insurance products such as medical, dental and vision.
  • Support for voluntary insurance products such as life, disability and accident.
  • Support for multiple insurance carriers (although some exchanges are single-carrier).
  • HRA and Section 125 pre-tax support.
  • Premium processing and billing support.
  • Support for insurance plan comparison and other employee shopping tools.

Nearly every function defined as “new” for a private exchange is not new—these functions have been part of group benefits administration systems for over a decade.  As I’ve said, the “new” private exchanges are 95% marketing hype and 5% enhanced decision support.

I have attended dozens of conference breakout sessions, read articles, talked to “private exchange” vendors and seen countless demos. The only word I can use to describe the whole group private exchange world is “crazy” — wonderful, “Show Me the Way” kind of crazy.

Given that we’ve been there and done that with the technology in the private exchanges, I can offer some informed observations about how they will play out as employees use them to select coverage under the rules established as part of Obamacare.

–It would be very difficult to move to an Expedia-type shopping model for employees’ insurance. Insurance carrier requirements for participation and underwriting through private exchanges make the disintermediation of the health insurance broker less likely than the disintermediation of the travel agent.  Few exchanges are even talking about vendor participation. It takes years to develop benefits administration systems simply because of the inherent complexity of insurance. A good technologically and customer service driven health insurance adviser is worth her weight in gold, and will continue to be.

–While Health Sherpa has been described as a somewhat functional equivalent to healthcare.gov, that claim is, well, crazy. Health Sherpa—although a great idea—has no ability to process eligibility, enrollment, carrier connectivity or anything required in a true benefits enrollment or exchange platform.  Health Sherpa is a clean front end for displaying plan options and rates but has no back end to support the followthrough required by the carriers or the federal or state governments.

–Recently, the president invited executives from a few of the nation’s top tech companies to the White House for a highly publicized meeting.  Why?  What do Yahoo and Amazon know about health insurance exchanges, enrollment, eligibility and carrier connectivity?  Exactly nothing!

If the president wanted more than a photo op, why didn’t he call Rich Gallun or Don Garlitz from bSwift or ask my company, benefitsCONNECT, to join the discussion? Between us, we accurately and electronically process many millions of enrollments—completely eliminating the need for paper. Either company could have saved this country hundreds of millions of dollars and produced a public exchange for Obamacare that actually works.

There’s actually one thing that’s new about private exchanges: While benefits administrations systems have become somewhat standardized, if you’ve seen one private exchange—you’ve seen exactly one private exchange. They are all different, from their front-end requirements to their back-end requirements.

As I said, it’s a craaaazy world we live in.

Employers Must Demand More from Their Broker

This is Part 1 in a two-part series about what employers should expect from their insurance brokers. Part 2 in the series will be forthcoming soon.

Setting The Stage
The world of health care finance is changing and the role of the health insurance broker is changing just as rapidly. The role of a trusted advisor is more important than ever. Health benefits for any size employer demand a benefits professional who has the client’s best interests at heart. Employers must explore current benefits offerings and demand a package best suited to their needs.

Voluntary benefits, self funding, and Consumer Directed Health Care are just a few of the many options every employer must discuss with their broker. Many employers are also demanding that their brokers account for their income.

The days where brokers were paid a commission by the carrier and counted on a regular double digit raise simply by telling the employer to re-enroll are gone. Some carriers are changing their compensation model. Instead of paying a percentage commission they are paying per head, also known as a capitation model. This model eliminates the automatic pay raise brokers have been experiencing and forces brokers to explore other options to replace lost revenue.

Employers should insist on a written agreement outlining the broker’s commissions and the services they will receive. A good broker will help an employer design a plan, market the plan to carriers, and analyze the costs and benefits of suitable plans. Beyond that, some brokers may handle open enrollment, resolve billing and claim issues, and help communicate with employees, but it’s essential to clarify such expectations up front.

If your company is self-insured or experienced-rated, retain a competitive broker group to periodically conduct an independent market pricing comparison. You will pay a consulting fee for such services, but the initiative may result in significant savings.

Discussions regarding containing health care costs have traditionally focused on educating and influencing the employee consumer of health insurance. But now, as soaring costs and growing complexity have become the norm, employers too need to educate themselves in order to understand how brokers are compensated and how they can reap the most value from the employer-broker relationship.

Technology As Differentiator
Just as the Internet has empowered consumers, so has it empowered health insurance brokers. While once the task of acting as conduit between insurance company and policyholder required long administrative hours, computers now allow broker and insurance company to instantly transfer information.

Still, time saved by computer must be made up by competing for a limited and educated client base. The new technology has in part driven a trend towards specialization: brokers are marketing themselves as specialists in a given industry. One might be the specialist in non-profit health insurance while another may specialize in the travel industry. This allows brokers to be aware not just of policy options but also of the typical wants, needs and budgets of a given industry.

What directions technology will propel the industry will be revealed only with time. One thing that remains clear is that Americans do not want to worry about their health coverage and will look to experts for help securing the best service at the right price.

Every broker has the best service and every broker offers the best products, just ask them. What differentiates a broker is their technology. Not only the technology a broker uses in their office but more importantly the technology the broker provides to the employer groups. Most brokers are very reactionary. They provide technology to their clients only when the client demands it. All parties — employers, employees, Third Party Administrators, carriers, and brokers — must utilize technology tools.

Benefits administration software, COBRA administration tools, HRIS, and consolidated billing services are just a few of of the technology tools used by brokers and their clients. The days of brokers providing quotes and enrollments are over.

In the next article in this series, we will explore in more detail how top brokers are using these technologies to run their business.