Will you be in business in six years? What will that business look like? Good questions. Knowing exactly what’s going to happen would be incredible. It would change your business and your life.
It’s the sub-plot of one of the greatest movie trilogies ever, “Back to the Future!”
Biff, Marty McFly’s nemesis and the town bully, gives his past self a Sports Almanac with details of the future. With this information, Biff uses it to bet favorably and amass a fortune. If you knew what the health care market would look like in 2020, it would change your future, too. Right?
I don’t have a time machine like Marty McFly. But I saw how a government responded when they needed to reduce health care costs in Canada 20 years ago before I moved to America. I’ve been interviewing industry leaders and experts on this topic for months.
Why 2020? Because round one of PPACA will be fully implemented by then. We’ll be past the delays, mandate fines will be up to full-scale levels, and carriers will have determined how to price their plans accurately. We’ll be done fighting with the installation of PPACA and will be settled back into serving clients.
Here are my predictions for where five trends will take us over the next six years.
(AP Photo/Paul Sakuma, file)
Prediction No. 1: The employer mandate
This will play out very differently for small and large employers.
In 2006, 63 percent of small employers provided health insurance. In 2014, it’s 44 percent. This trend will continue but will even out with about 25 percent of small employers providing health insurance in 2020. Why? Because it’s such a hassle. With increased regulations and costs, why will even 25 percent still play? Many are maternalistic and really want to take care of their people, while others work in industries where they need to compete with large employers for talent.
Since 2000, the percentage of large employers providing health insurance has held steady at around 98 percent. It’s an expectation of employees and these companies use benefits as a way to attract and retain talent. While we’ve all heard threats of employers just paying the fine, the math rarely works to their advantage (especially when taxes are considered). I predict 98 percent of employers will still provide health insurance in 2020.
(AP Photo/Rick Bowmer)
Prediction No. 2: The individual mandate
In 2014 and 2015 while the fine is low, I believe most of the newly insured will be subsidized (this is true of what happened in Massachusetts). But by 2017, as the fine increases and people experience paying it, most non-insured Americans will join the club. As always, money is the motivator — it’ll be a better deal for them to purchase a plan, not pay a fine, and get the coverage.
I also believe the government’s need to capture more money will drive them to change the rules so people who don’t get a tax refund will still be fined.
To pay the lowest premium, most people will buy bronze and silver plans (81 percent of early sales are coming in this way). As a result, Americans will push for consumerism tools. Which brings us to our third trend…
(AP Photo/Eric Gay, File)
Prediction No. 3: Product design
Medical and ancillary plans will experience different transformations.
Cost increases between 2014 and 2020 will cause carriers to strip out many services that used to be included in every health plan (this happened in Canada in the 90s). We’re seeing the start of this already: reduced networks, reduced prescription formularies, increased out of pocket costs and expansion of self-funded plans. These will continue.
The key issue by 2020 will be the large-scale lack of doctors to serve Americans. In 2020 there will be 92,500 too few physicians. Selling medical plans when people can’t even get a doctor visit will be, well, challenging. Which brings us to an area of growth…
I predict the number of ancillary products will skyrocket. Because of higher out-of-pocket costs, we’ll see tremendous innovation with products that save members money and fill the holes in their sparse medical plans. Offerings like critical illness, gap, accident, telemedicine, advocacy, price transparency, innovative medical devices and new ways to deliver medical services. I predict brokers will provide value by selling all these and more.
(AP Photo/J. Scott Applewhite)
Prediction No. 4: Politicians
Today, it feels like politicians will forevermore be in the health care business. I don’t think so. Over the next few years we’ll get through the implementation of PPACA, but the politicians’ appetite to stick around will wane. They’ll realize they can’t fix the whole industry and they’ll move on to the next crisis.
PPACA will only inflate the budget drain of Social Security and Medicare. By 2020, politicians will be focused on cutting back and re-elections.
(AP Photo/Ted S. Warren)
Prediction No. 5: Brokers
The prior four predictions will drive this last one. Roughly 30 percent of existing medical brokers (many of them dabblers, others too tired to reinvent themselves again) will be driven out of the business. Among those left, there will be a wider divide than ever between two types:
The traditional broker
Some will try to survive on thinner margins and make it up in volume. As you know, some agents today are little more than quoters, but exchanges (and many of PPACA rules) simplify the step of getting a rate quote. This is why medical commissions will tighten. To combat this, national brokerages will invest heavily in technology efficiencies. Many small agents will sell their business to these larger companies. As mentioned previously, I predict these brokerages will cross-sell more ancillary products to bolster their revenue.
The new broker
Some brokers will change the rules. Driven to stand out from the crowd, they’ll learn to stop selling “the quote.” Rather, they’ll sell their expertise and become true advisors to their clients. Yes, they’ll earn commissions. Yes, they’ll sell many more ancillary products. But they’ll also sell other consultative services outside medical insurance.
They’ll recognize the power of their audience and stop leaving money on the table. Their motto? “We leave no benefit need unserved.”
If they don’t broaden their benefits expertise, they will partner with other benefits professionals they trust. Think of them as a ‘benefits concierge.’
They’ll become true business advisors. They realize how overwhelmed their clients are and how this will only get worse over the coming years. They’ll recognize how much support they can give, they’ll expand on it and they’ll start charging for it.
Agencies will grow because they’ll build different areas of expertise — always on the lookout for new value-added services (that clients will pay for) to lock-in their clients for years to come. What expertise is for you: HR, tax, accounting, legal, compliance, PPACA employer reporting, transitioning employees from employer-paid to individual plans, benefit plan options for employers who don’t want to provide health insurance, HIPAA, security, IT, small business consulting? The list is endless…
Reid Rasmussen, owner at Benefit Brainstorm, will be speaking at the Benefits Selling Expo in Colorado Springs, Colo. in April. Make sure to attend Reid Rasmussen’s session “Back to the Future of Health Care,” at 3 p.m. on April 2.