Taking Shape
2021 Health Care Survey
Sponsored by
By Emily Payne
Illustration by Shaw Nielsen
ast year’s Health Care Survey was conducted in the early weeks of the pandemic, when it was still difficult to truly know the extent of COVID-19’s impact on business operations and the economy as
L
a whole. This year, we’re better able to start developing a clearer picture of the long-term impacts.
More than 300 people responded to this year’s survey, representing a mix of brokerage employees (21%), consultants (17%), owners (15%), general agents (15%) and other benefits professionals. Their books of business range from the small-group space all the way to national accounts. How have these folks fared in the past year, and what does the future have in store for them? Let’s take a look.
Year of disruption
It will come as no surprise that the small-group space was hit hardest by the disruptions of the past year, with 45% of brokers reporting losses of up to 24% of their small-group portfolio in 2020 and 26% expecting to see decreases this year, as well. Respondents’ mid-market, large group and national accounts all fared better in comparison.
One area where we expected to see significant change was in clients’ preferred enrollment methods. While 63% of respondents said they expect changes made to enrollment strategies to remain the same going forward, the mix of methods used remained nearly identical to last year—with one notable exception. Those selecting “other” increased from 3% to 9%, noting options such as phone enrollments, Zoom and other virtual meeting options, and, yes, even mailed paper enrollment. Meanwhile, the percentage of respondents reporting that less than a quarter of their clients used an online enrollment tool dropped from 38% last year to 25% this year.
And of course, the award for Health Care Disruptor of the Year goes to digital health care, with 62% of respondents tagging it as a key area of growth during the pandemic, and 71% anticipating that it will have a positive impact. Carriers, regulators and innovators are working around the clock to catch up to the explosive growth in demand, and we expect to see even more attention devoted to this area in future years.
Do you expect the percentage of groups dropping coverage to increase, decrease or stay the same in 2021?
Increase a lot
8%
Increase a little
19%
Stay the same
54%
Decrease a little
13%
Decrease a lot
6%
Increase a lot
8%
Increase a little
19%
Stay the same
54%
Decrease a little
13%
Decrease a lot
6%
How do your clients’ employees primarily select and enroll in employee benefits?
Meet with worksite enroller or broker 1:1
Meet with worksite enroller or broker in a group setting
Meet with an internal HR advisor
Use an online electronic enrollment tool independently
Use other self-serve options (call center etc.)
Other
36%
45%
17%
52%
15%
9%
In light of the pandemic’s effects on businesses, which area(s) do you think will see the most focus and growth in the next five years?
Caregiver benefits
FMLA revisions
Gig economy
Digital health
Chronic condition management
23%
18%
25%
62%
33%
Though this past year saw monumental shifts in the health care space, not everything can be rushed, and many of the transitions that began long before the pandemic continue to plod along steadily, including growth in self-funding. Similar to last year, respondents were evenly split between predicting self-funding to grow (48%) and hold steady (48%), but very few expect it will decrease. Meanwhile, the majority of brokers (59%) expect their compensation from fees to remain about the same, while 39% expect it will increase in coming years. This is a slight change from last year, when 64% expected compensation from fees to hold steady and 33% percent expected to see an increase.
Similarly, the pandemic has not radically disrupted the factors that brokers and their clients consider when looking at health insurance carriers. Network breadth is still the top factor, followed by service and price. In terms of strategies, while telemedicine saw major gains, other health care innovations continue to slowly drive the industry forward, including direct contracting, reference-based pricing and data transparency.
The more things change…
Top factors considered when recommending a health insurance carrier
Network breadth/strength
Better servicing and processes
Lower price
Rate the impact you expect each of the following innovations to have on your business performance over the next three years.
Direct contracting
Reference-based pricing
Concierge services
Data/transparency tools
Medical tourism
Artificial intelligence/machine learning
Direct primary care
Telehealth
Government regulations
The legal challenge against the Affordable Care Act took a back seat to other key health care reform issues during the past year, including an extended special enrollment period, the implementation of the American Rescue Plan Act and the Consolidated Appropriations Act. It appears all of this chaos has been good for business, with 79% of respondents saying their clients have become more reliant on them for compliance advice in recent years.
Regulations: A lot to cover
How have the following recent regulatory changes to health care affected your business?
Association health plans
Short-term health plans
Individual-coverage health reimbursement accounts
Price Transparency Rule
American Rescue Plan
Consolidated
Appropriations Act
As for the implementation of the hospital price transparency rule, which went into effect in January of this year, there are still a lot of kinks to work out. Forty-eight percent of respondents say the rule has not been effective, while 75% say it has had no impact on their business as of yet.
Looking ahead, many respondents aren’t so keen on the Biden administration, with 63% predicting it will have a negative impact on their business. Still, most say that some government changes have been helpful, including the expansion of individual coverage HRAs and the American Rescue Plan Act.
How have the following recent regulatory changes to health care affected your business?
Extremely positively
Somewhat positively
No impact
Somewhat negatively
Extremely negatively
How has the hospital price transparency rule impacted your business and clients so far?
10%
24%
35%
26%
5%
Extremely positively
Somewhat positively
No impact
Somewhat negatively
Extremely negatively
2%
16%
75%
6%
1%
How worried are you about the ongoing consolidation of health care systems and health insurers?
Consolidation of health care providers is still a major concern among brokers, with 65% responding that they were extremely or somewhat worried about this trend and just 13% saying they aren’t worried at all. Most respondents aren’t particularly optimistic about outside disruptors’ ability to make a dent in the current model either, with 44% not worried about new disruptors and 29% reporting it’s not even worth thinking about. Even when asked about the likes of major players like Walmart and Amazon, just 31% of respondents see potential for improvement.
Brokers are also a little less optimistic about changes within their own business this year, with 24% expecting their brokerage to buy another’s book of business in the next five years and 21% planning to merge (compared to 32% and 28%, respectively, last year).
Mixing things up
Extremely worried
Somewhat worried
15%
50%
21%
13%
Slightly worried
Not worried at all
Which of the following would you say is likely to happen over the next five years?
My organization will acquire or merge with another broker/agent organization
My organization will buy out the book of business of a retiring broker or agent
My organization will be acquired by another broker/agent
My organization will exit the health insurance brokerage business
None of the Above
21%
28%
24%
32%
15%
11%
6%
6%
46%
44%
Over the past year, we’ve seen an increased focus from both employers and employees on voluntary benefits, particularly those related to financial stability. In fact, more than half of respondents (54%) said they have consciously made voluntary benefits a more prominent part of their offerings in recent years, and 75% expect their compensation from voluntary benefits to increase in 2021.
Topping the list of voluntary benefits are the usual suspects, including dental, vision and life insurance. Meanwhile, interest in critical illness continues to grow, and the buzz around ID theft protection and legal benefits also increased over the prior year. Price continues to be the primary factor in offering voluntary benefits.
Changing perception of voluntary benefits
Factors impacting willingness for employers to offer more voluntary products in the future
Lower price
Top factors considered when selecting an ancillary carrier for clients
Access to low-cost product options
Hassle-free broker experience, convenience and simple admin
Design of simple, convenient enrollment processes for my clients’ employees
Wide breadth of product options
Fast quote turnaround
Carrier brand
30%
29%
13%
9%
7%
5%
4%
4%
3%
The impact of the COVID pandemic on the benefits industry and the clients they serve will be felt for years to come, as employees and employers reconsider their priorities and new disruptors swoop in to battle for consumers’ newfound interest in digital health tools. Meanwhile, we’re still waiting to see the long-term impacts of the pandemic on workers’ mental and physical health, as well as the development of the future generation of workers.
On the horizon
Design by Chris Nicholls
Simplicity/convenience
of enrollment
options
Carriers with
better brand
More member/employer education
Consumer
life-stage bundles
Educational/Support materials offered to me and my clients
Design of simple, helpful benefits administration technologies
Commissions