The evolution of insuring small to mid size employers

We know the healthcare landscape has changed over the past decade. Employers face new challenges. Health plans have responded by overhauling product offerings. Benefits brokers and agents have brought expertise on the changes to employers. Managing these changes will help small-to-midsize employers better understand cost-effective coverage options for their employees.

Over the past decade, business owners have faced a myriad of changes. The workforce has been shifting; last year, millennials surpassed baby boomers as the nation’s largest living generation. Technology has been evolving quickly; today’s consumers are less likely to leave home without their mobile device than without their wallet. Employers are facing heightened consumer expectations; a more tech-savvy population is demanding anytime, anywhere engagement. While technology allows for increased service or faster response rates, it also brings added challenges, ranging from the need for better data management to increased competition and more.

The healthcare-related challenges employers face have also changed. More than a decade ago, health plan premiums were growing by leaps and bounds. Back-to-back, year-over-year increases of 30% or more were not uncommon. Small group employers, in particular, were struggling with how to compete by offering comprehensive benefits. To cope, some stopped providing dental and vision coverage. And many shifted more costs to employees.

All of this created an environment conducive to change. And in response, presidential candidates used their platform leading up to the 2008 elections to promote healthcare system overhaul. The passage of the Patient Protection and Affordable Care Act (ACA) two years later brought about sweeping changes in short order-changes that forever altered the health care landscape in the U.S. Employers today are still struggling to understand and interpret what the law means for their businesses.

The entire underwriting process changed too. Today more people than ever are able to find coverage through public exchanges and Medicaid. However, little, if any, cost relief has been realized. As the market landscape changed, carriers exited markets, and mergers and acquisitions reduced the number of players, leading to fewer choices for buyers. Products have evolved to meet changing regulatory requirements. Through it all, employers continue to struggle with offering the right benefit packages to attract and retain talent.

Next: Respond to market changes

Insurance brokers have responded to market changes and continue to find ways to attract and serve small- to mid-size commercial customers. They’ve built expertise and assumed a more consultative role in the marketplace. They’ve become familiar with various elements of the ACA and the effects. They understand tax implications and other requirements, and share that information with business owners and benefit managers to help them navigate the ever-changing environment.

Larger brokers have developed or leveraged in-house research and compliance capabilities. Smaller ones have made use of expertise found in the carriers they represent and through independent resources. And they’ve used this knowledge to make sure clients have the information and health plan products they need to remain competitive-and compliant.

The reality is that the healthcare marketplace continues to evolve. Today we see more preferred or narrow network options available, and many midsized employers are exploring self-funded options instead of fully-insured products. Many providers find themselves with full patient panels or very limited access-largely because of an increase in the number of insured people under the ACA. And increased regulatory and compliance requirements are demanding providers and payers to do more for less.  

As a result of these changes, employers seem as if they are caught in the middle. Not only must they manage the day-to-day operations of their businesses and the competitive landscape in their industries, employers also need to continually re-evaluate their coverage options and look for cost-effective ways to retain their employees.

Monica Majors, is vice president, strategic sales and marketing, Sutter Health Plus.