How to conquer Obamacare, Pt. 2: A battle plan for brokers, employers and carriersArticle added by Philip Eide on December 6, 2012
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Philip Eide

Shaker Heights, OH

Joined: December 12, 2010

Disruptive change has created tremendous opportunities for carriers, brokers, employers, employees and individuals. Because these changes are, or will be, federal or state regulated, employers must change or face substantial penalties.

My last post provided a background on PPACA with links to valuable information to answer questions for brokers, employers and carriers. Now I look to provide workable, efficient and cost-effective strategies for brokers and employers to deal with PPACA/Obamacare for the 2013 plan year and beyond.

Update on PPACA

In part one of this series, I mentioned that the original lengthy PPACA legislation provided few details. With the election over and Obamacare firmly embedded, the Department of Health and Human Services (HHS) — through Secretary Kathleen Sebelius — has been busy rolling out details. These included:
  • A proposed rule that, beginning in 2014, prohibits health insurance companies from discriminating against individuals because of a pre-existing or chronic condition. Visit here for more information regarding this rule.

  • A proposed rule outlining policies and standards for coverage of essential health benefits, while giving states more flexibility to implement the Affordable Care Act. Visit here for more information regarding this rule.

  • A proposed rule implementing and expanding employment-based wellness programs to promote health and help control health care spending. Visit here for more information regarding this rule.
This flow of details and disruptive change from HHS — and other agencies — is expected to increase at a rapid pace. While the details will assist in creating strategic insurance/benefit designs and plans, they also add to the work load of carriers, brokers and other decision makers.

Let's get started with our five-part strategy for conquering PPACA/Obamacare and profiting. It should be noted that the following strategies are the result of years working in the insurance industries, input from many industry leaders and substantiation by noted industry consultants. Of interest should be two white papers:

1. From Booz & Company, a paper about private exchanges and defined contribution titled, "The Emergence of Private Health Insurance Exchanges Fueling the 'Consumerization' of Employer-Sponsored Health Insurance"

2. A piece from Deloitte titled "Power to the People"

Below, we will explain in simple terms how brokers can assist employers, employees, individuals and themselves by embracing a five-part strategy with the following advantages:
  • Complying with PPACA
  • Continuing to offer employee benefits on a budgeted and cost-effective basis
  • Offering employees choices to meet their individual and family needs
  • Remaining competitive for retaining and attracting employees
  • Dealing efficiently and cost-effectively with the technology required to meet the demands of PPACA and employee education, communication, enrollment and data distribution processes
  • Providing brokers substantial current and ongoing revenue streams in the face of shrinking health plan commissions due to MLR and other factors
  • Utilizing inbound marketing by leveraging the power of the Internet, search engines, social/business Media and SEO to shorten selling cycles, reduce marketing costs and increase revenues
The five integrated strategies

Here's where we left off with part one. The following can be integrated or stand alone. As you will read, individually, they provide tremendous value. On an integrated basis, they work together to deliver the broker and the employer seamless solutions to the disruptive changes and compliance with PPACA. They permit the broker to remain or become the trusted advisor of the employer while remaining financially viable. They allow the employer to focus on operational efficiencies and profitability.

1. Private exchanges — For offering core, voluntary/worksite and ancillary plans, programs and services to employer groups — small, medium and large. While PPACA has placed the focus on "health insurance" (federal and state exchanges) the value and popularity of voluntary/worksite and ancillary benefits were not addressed. We are providing brokers an opportunity to offer employers, employees and individuals an all-inclusive, flexible private exchange that will be branded to the broker, employer or a third party.

Advantages: The broker and the employer become the efficient and cost-effective conduit for:
  • Providing employee/individual education and communication about the plans, programs and services.
  • Providing enrollment choices for the insurance and benefits being offered to the employees and individuals in 2013 and beyond
  • Data management and distribution to the carriers, administrators and service companies.
2. Defined contribution — Plan design for providing employers with budgetary controls, employees with valued choices to meet their needs and price points, brokers with positioning as trusted advisors (including new revenues streams) and carriers with enhanced distribution channels.

Advantages: This creates an understandable insurance/benefit plan design providing the following opportunities:
  • Employers are able to budget their financial contribution annually to the insurance and benefits provided to the employees by their classification — without discrimination — in the form of dollar/credits.
  • Flexibility to offer a self-funded plan that provides incredible capacities for the broker and the employer to retain control and influence the employees' ability to become better consumers.
3. Integrated benefit choices — For providing employees and individuals the capacity to meet their needs and price points. The broker — working with the employer — selects carriers and the plans, programs and services, creating a menu of choices, including core, voluntary/worksite, ancillary benefits and tax-advantaged plans. Tax-advantaged plans include:

A) Section 105 and 125 of the IRSC
B) Medical/health reimbursement accounts
C) Dependent care reimbursement accounts
D) Transportation/parking reimbursement accounts


Advantages: Offering an integrated set of plans, programs and services creates win-win-win opportunities. These include:
  • The employees or individuals win. They are given educated and empowered choices to meet their specific needs and price points.
  • The employers win. Without the burden and responsibility of selecting plans, programs and services for the employees, they are enabled by the broker to offer a flexible set of choices.
  • The brokers win. They become trusted advisors, assisting the employers in building a menu of plans, programs and services that assist the employees in making personalized choices. The commissions generated from the voluntary/worksite plans and ancillary choices, along with potential fees, offset commissions lost from the traditional health plans.
4. Support technologies — For employee education, communication, enrollment and data distribution management. A select group of Internet software and cloud-based companies can now provide the back office technology required to support private exchanges integrated with defined contribution (DC) plan design and integrated insurance/benefit choices. Our affiliated partners' core capacities assist brokers and small, medium or large organizations — as well as individuals — by integrating most carriers as well as their selections of plans, programs and/or services.

Advantages:
  • Empowered education to employees, individuals and their families, generating better consumer-based buying, employees' appreciation for employers, and greater penetration/persistence for the brokers and carriers/providers.
  • Choices of enrollment capacities: Group-meeting based; one-on-one; Internet based; call-center based; mobile or a combination of these methods.
  • Data distribution management, taking the burden of paper-based forms, compliance issues, accuracy and multiple distribution channel requirements out of the hands of employers, brokers and carriers/providers. Information and data is delivered electronically.
5. Inbound marketing — For shortening selling cycles, reducing marketing costs and driving revenues for carriers, brokers and service companies by leveraging the power of the Internet, search engines, social/business media and SEO.

Advantages:
  • Shifting away from costly and unmeasurable traditional outbound marketing strategies, including: Cold calling, media advertising, call centers, mailers, traditional three-day trade shows, seminars, etc.
  • Reaching a larger targeted market to meet their specific needs and price points.
  • Gaining access to increased quality prospect traffic to website landing pages, narrowing the prospect/sales funnel.
  • Receiving input from qualified prospects who are interested in your specific plans, programs and/or services.
  • Focusing the sales staff and producers on presentations and selling, not prospecting.
  • Gaining a greater ROI
It's time to define your role post-PPACA and get moving to participate. Disruptive change has created tremendous opportunities for carriers, brokers, employers, employees and individuals. Because these changes are, or will be, federal or state regulated, employers must change or face substantial penalties.
Here is what parties to insurance and benefits should act on:

1. Carriers — Design differentiated plans, programs and services that are compliant with PPACA and that meet the needs of brokers, employers, employees, individuals and their families. Embrace participation in private exchanges, defined contribution plan designs and assist in funding the utilization of integrated technologies to reduce administrative costs and for better meeting MLRs.

2. Brokers — Take advantage of the above strategies. Dedicate your time and efforts to informing you clients and potential clients about PPACA. Explain the opportunities you can provide by shifting to a fee-based model. Go from doom and gloom to optimism and excitement.

3. Service companies — Define your specific area of expertise and what differentiates your organization in the insurance and benefits marketplace. Gain a thorough understanding of the PPACA regulations that apply to your sector of the industry as they roll out. Understand the needs of carriers, brokers, employers, employees and individuals.

4. Employers — Embrace the disruptive changes created by PPACA/Obamacare. The five strategies outlined above not only substantially reduce your time spent on benefits decision making, but also deliver predictable and controllable benefit costs. You should fully grasp the importance of communicating with employees. Provide the time for enrollment — whatever the system or methodology. Shop well for your broker(s). They should be able to improve your overall benefit plan design while reducing your costs. Treat your brokers as trusted advisors. Discuss compensating them on a fee basis. The brokers' commissions from health plans are disappearing, and yet your needs for their services is increasing. While the health insurance and benefits markets are shifting to an individual platform, you can shift to a defined contribution model and continue to retain and attract employees based on the dollar/credits you provide.

5. Employees, individuals and families — The responsibilities of choice and consumerism have shifted to your shoulders. While in most cases, the employer will continue to contribute dollar/credits to support your insurance/benefit needs, you will need to understand your choices of health plan coverage — exchange-based and other — as well as the selections of voluntary/worksite and ancillary plans, programs and services. When participating in consumer-driven plans (HDHPs, HRAs, HSAs, flex, etc.) you will be provided an opportunity to allocate your dollars in the selection of care, but buy wisely. When selecting coverage on an individual basis, you should use the Internet, as well as federal, state and private exchanges as they become available. Use the Internet to find specialists in the plans, programs and services that meet your needs and budget. If affordable, consider paying the advisor on a fee basis. They should work for you — not for the carrier.
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