From revenue models to product models, and even technology,
everything is changing
by Brian Poger Mr. Poger is the CEO and co-founder of Benefitter. Benefitter provides software and services to help employers make a positive, profitable and deliberate transition to the new era of health benefits; an era defined by individual empowerment. Moving from group insurance to the individual market can be a win-win for employees and employers alike. But a change of that magnitude can be intimidating; everyone has questions. Benefitter produces answers and a path to legally compliant implementation. You can see the full results of Benefitter’s broker survey at www.benefitter.com/broker-survey
I recently asked one thousand brokers a straightforward question, “What advice would you give Congress around the ACA?” Reading the feedback, I could tell most responses had been written with clenched fists and gritted teeth.
The frustration we feel is palpable. Across the nation, brokers feel like the rug has been pulled out from under us. Here are just a few of the main concerns that surfaced from our survey.
- We are working more for less
Regulations are more complex than ever before, yet commissions are declining. One broker stated, “If I calculated what I get paid to help a client through the exchange and what the carriers are paying I am making about $2.50 an hour.”
- We feel helpless to assist our clients
In the face of spiraling rates, we become the messenger rather than the insightful advisor we want to be. Our tried-and-true strategies don’t make enough of a dent in double-digit rate increases to matter to our clients, just as one broker wrote, “My clients literally get a sick feeling when they see me coming. I’m tired of being the bearer of bad news.”
- Work/life balance is out the window
Due to the timelines caused by early renewals and grandmothering, 12 months of work has now been compressed into two or three. One person told me, “During the fourth quarter, I am working 12 to 16 hour days just to tread water.”
More than 80% of the brokers who responded to our survey had negative or strongly negative feelings to the Affordable Care Act. But here’s some tough love: despite the new Republican Congress, the reality is that core elements of the law are likely to stay intact, and the volatile political environment will only add further uncertainty to our day to day business.
The Victim Psychology
As someone who holds the broker profession dear, I also feel frustrated. I’m concerned though that for too many brokers, frustration has transformed into despair. Clinical psychologists know that people respond to traumatic events in a highly personal manner.
While some people bounce back quickly, others never truly heal from their physical and emotional scars. In short, you can be a victim. Or you can be a survivor. Victims feel helpless and fragile. They focus on memories of the past and how things just aren’t what they used to be.
Many brokers have assumed a victim mentality, like this one who wrote to me, “I’ve been in the business for over 30 years and am seriously considering retirement. We used to have a fairly healthy industry, but now it’s gone.” Survivors, by contrast, are grateful for what they have.
The trauma still remains, but it is now a memory, integrated into their life story. Their day-to-day becomes focused on rebuilding and healing. Several brokers I spoke to took on this perspective. Though they had suffered longer hours and lower pay, they viewed their struggle as a noble effort on their clients’ behalf: “I have worked harder and longer in the years since Obamacare trying to help save these businesses…my clients depend on me.”
Is there room for positivity?
As an entrepreneur, I have been involved in several ventures that reached the lowest-low degree of desperation just prior to finding the path to success. In the start-up world there is no status quo. The only way to create a repeatable business model is to take on adversity with passion and a positive view.
Positivity in business is not always helpful—being blindly optimistic is as dangerous as being overly pessimistic. And let’s face it, hope is not a strategy. But in my career, I’ve found in times of uncertainty it’s much easier to focus on negatives than positives. Your brain is bombarded with so much information every second that you can’t process it all, so what you choose to focus on actually determines your reality.
Effective people, however, navigate difficult times by finding actionable strategy. Is the current environment really as bad as it appears? Many of the survey responses fixated on double-digit rate increases. For example, one broker told me, “I never use the word ‘affordable’ when referring to Obamacare. This legislation is anything but.”
Interestingly, if you look at the annual Kaiser/HRET Survey of Employer Sponsored Health Benefits, the average cost of family coverage has risen around 4% per year since 2011. This actually represents a slow-down in the rate of growth, compared to the time prior to ACA. The average annual increase for the first decade of the new millennium was a whopping 9%.
So why the negativity on cost increases now, when they were clearly a challenge long before ACA? Here’s what I think. If you’re like most brokers, in the last two years you’ve had to sit across from a customer and deliver at least one huge renewal. Everyone has. But how did you explain it? Rating model changes? Minimum plan requirements? Everyone has had this experience. And it is a traumatic experience that you remember, and one that shapes your view of the market.
Don’t just survive in the post-ACA world, thrive!
Although the ACA is far from perfect, there are components of the law that can become the catalysts to positive change. Earlier I discussed the victim vs. survivor mentality, but there is indeed a third response that is far better— thrive. Thrivers find positive perspectives, and turn them into realities for their clients.
Specifically, I’ve identified 3 characteristics that are consistent across most brokers who thrive.
- First, brokers who thrive embrace new revenue models. Commissions will continue to face downward pressure as insurance companies aim to cut costs. Thrivers know that management fees are the future. When brokers deliver valuable, cost-saving services to employers, fees are easily justified.
- Second, brokers who thrive differentiate themselves with technology. While victims view technology with indifference or as a threat, thrivers know that technology (used correctly) can enhance their value to clients, and simplify an increasingly complex world.
- Third, brokers who thrive devote time and energy to understanding new benefits models. The tried-and-true group insurance model no longer makes sense for everyone. For example, companies with a high proportion of lower-income workers and with low employee participation may be better served with individual market plans than with traditional group offerings. Many customers meeting this profile are the same customers facing those double-digit increases.
Instead of delivering the bad news and focusing on the negative, embrace the potential alternative options that the Affordable Care Act has provided and thrive. As the client’s trusted advisor, it’s your imperative to provide the right recommendation for their specific business situation. The entrepreneurial spirit is strong in the brokerage community, and previous market shifts have been embraced and overcome. It’s up to us to take it from here. You’ve taken your licks, but that’s the past. Personally, I think the future is bright. ♦