Q4intelligence

Health Insurance and Benefits Market Shifts to 

Individual Needs

 

Screen Shot 2016-01-17 at 4.14.57 PM

As part of an article I recently wrote for Benefit Selling regarding trends to expect in 2016, I solicited help from a handful of friends I consider among the smartest professionals in the industry. Due to article length constraints, I wasn’t able to share everything, however, they are graciously sharing their ideas here on our blog.

Our next guest blogger in the series is Michael Lujan, Co-Founder and Chief Strategy Officer at Limelight Health. A former agent, general agent and Director of Sales for Blue Shield of California, Michael is an outspoken advocate for the agent distribution channel, small business and the uninsured.

IN MICHAEL’S OWN WORDS

Michael Lujan Health insurance and benefits

Agents should change…and then change some more. The health insurance and benefits market will continue to adjust and settle, in much the same way a building settles after an earthquake. If the ACA is like a disruptive earthquake, some structures will be found stable while others might be “red-tagged” and marked for demolition. Some agencies are in the midst of retrofitting themselves and working with consultants to fully assess their ACA-readiness, making changes for long-term viability in this changed market. I suggest considering the following trends and predictions.

CHANGES IN THE INDIVIDUAL AND FAMILY PLAN MARKET

The Individual and Family Plan (IFP) market segment will grow but largely through plan-based enrollment (the carrier captive agents) and new and larger online players like GoHealth, eHealth, Stride and Gravie.

Since most carriers pay little, to actually nothing, for individual commissions, the message is clear that carriers would prefer to enroll IFP through their in-house sales staff or these aggregated channels. Agents should expect to sell less IFP or do it very differently going forward.

I hope to be wrong and still expect carriers will see the value in the traditional agent distribution channel and the variable cost model where you only pay agents when they sell something.  That is a hard system to beat and why the agent channel has been so successful over the past decades.

AGENT ROLE SHIFTS TO BEING MORE EMPLOYEE FOCUSED

Employer-based coverage will continue to grow and create more tools for employees to become more informed consumers.  This means cost calculators and decision tools that change the role of agents from advisers of employers to being more employee focused. This is a different skill set for many agents who spent the past decades advising the employer, the ones who made the health-coverage purchases on behalf of their employees. Agents should learn more about direct-to-consumer (B2C) sales and the tools supporting this.

Private exchanges will grow steadily and agents should get familiar with them instead of building their own. These large private platforms also include a host of compliance tools and valued services beyond traditional health and ancillary benefits.

Focusing on the employees doesn’t mean the employers should be overlooked. In fact, agents should get past being sellers of insurance products and be more solution-oriented to include payroll, HR and compliance services, which help serve as the outsourced HR and benefits department. After all, that is what small employers really want from their brokers.

TECH DRIVEN BY INDIVIDUAL NEEDS

As for technology, more names will be added to the ranks of Zenefits, Namely and Gusto. Google Ventures and other Silicon Valley venture capitalists will continue to invest in digital health and more insurance related ventures. Today there are more than 100 online benefits enrollment platforms; many also provide HR and payroll tools. Some will merge or just fall off leaving a smaller number of efficient models for agents to work with.

These systems will be the norm and brokers will forget life before these efficiency tools. As it becomes clear just how much is changing and past predictions proved right or wrong, the attention will move toward cost transparency and automation tools. Meaning, making assessment decisions through one single system: How much does a knee replacement cost? How does the doctor rank? And how quickly can I get the appointment?

Improving our health insurance literacy is another opportunity for technology. Only 1 in 5 consumers can accurately describe how co-insurance works. Also, more than 50% of us spend less than 30 minutes on the open enrollment process. Benefits communication will get modernized and help explain insurance in plain language with avatars and images to help explain concepts like “How does an HSA work?”

Big Data will be liberated and allow us to more easily share and analyze our data and help make us all better and more informed consumers.

We’ve only begun to see how technology is going to change how modern agents operate. In just five years, we’ll have five generations in one workforce and the millenials will drive this change. It’s about time.

Photo by Yarruta.