Earlier this summer, the Trump Administration released a rule expanding access to association health plans, then cut funding for navigators from $36 million to $10 million annually.
Later, in August, the Internal Revenue Service, Department of Labor, and Department of Health and Human Services released a final rule on limited duration health insurance, which essentially reverses a 2016 rule issued by the Obama Administration.
These are just the latest in a series of significant changes to the U.S. health care system over the last several years—and Jay Duke, owner of Waring-Ahearn Insurance, Inc. in Leonardtown, Maryland, anticipates plenty more disruption in the years ahead.
“The biggest problem with the Affordable Care Act was that it dictated so many coverages be included in every single policy,” Duke says. “Instead of being able to shop for a car from a low-cost tiny little Smart Car all the way up to a Mercedes, we were all told we had to buy a Chevrolet.”
Now, “maybe we’re getting some choice back into the marketplace,” Duke says. “But with choice comes risk—and the need for careful analysis.”
Here are three changes life-health agents see coming down the pike for the U.S. health and benefits market:
1) Transformation of the individual market. If the individual mandate goes away, “many are concerned that all those people who enrolled in health insurance because they had to are going to start dropping it, and that the number of healthy people is going to move,” says Renee Guariglia, executive vice president at Falcone Associates, Inc. in Syracuse, New York.
Among those who don’t have access to employer-based health insurance, Guariglia believes there are two main camps. “Once you hit 40 and everything starts to ache, you’re probably going to keep your health insurance because you understand the value of it,” she points out.
Those individuals may have bought health insurance for the first time out of obligation under the ACA, “but are now realizing, ‘I’ve had this coverage, I didn’t have to pay a penalty, and by the way, I actually had to use this insurance,’” Guariglia points out. “They like the feeling of being insured and not having to wonder, ‘What happens if I get sick? What happens if I have a heart attack?’ If that catastrophic claim comes, they’re not going to go bankrupt.”
On the other end of the spectrum, however, are those in the 25-35 age bracket who have never had to use their obligatory health insurance.
“Some of them are going to say, ‘I can’t do it anymore. It’s not affordable—I’m just going to roll the dice,’” Guariglia says. “And I get it. I don’t encourage it, but I understand that when you’re paying $400 a month for health insurance and you have a $5,000 deductible, something’s gotta give.”
2) Generational customization. Mike Wojcik, senior vice president and principal of The Horton Group, headquartered in Orland Park, Illinois, points out that during a time of record-low unemployment and a robust economy, it’s more important than ever for workplace benefits to meet distinctly different needs.
“We have to be a thought leader for our clients to help guide them through this constant change,” Wojcik says. “It’s not just about a plan design, funding techniques or carrier choice. It’s figuring out how to help them manage their risk and engage employees to have a better understanding of the value of their benefits, and the impact they have on keeping a sustainable program.”
An important piece of that puzzle is generational planning. In 2018, the U.S. workforce encompasses four distinctly different generations: baby boomers, Gen Xers, millennials and now even Gen Zs, whose members are starting to graduate high school and college, seeking full-time employment. “The question we ask our clients is, ‘Do you have the right benefits to meet your future needs?’” Wojcik points out.
For example, millennials—who will account for 50% of the workforce in just a few years, Wojcik says—“want more value for their dollar. They may take higher deductibles because of lower costs, but they also might buy non-employer-paid voluntary benefits to better address their overall risk.”
Boomers, by contrast, “might stay with some more traditional models,” Wojcik says. “Or, if they’re empty nesters, they might move into health savings account plans to plan their retirement.”
The bottom line: Employee benefits options need to be customizable and tailored. “There has to be something for each generation,” Wojcik says.
3) More innovative insurance strategies. As the nation continues hiring younger and younger generations of team members, “workplace culture is very important, work/life balance is very important, and technology is very important,” says Gina Clevenger, owner and employee benefits consultant at Clevenger Insurance Agency, headquartered in Warsaw, Indiana. “That means employee benefits are going to be huge for staff retention.”
But considering the benefits expense is “a top-line budget item for most families,” Clevenger says, “insurance companies are going to have to continue to be creative with some of their sideline benefits” in order to contain costs.
Clevenger cites teledoc services or 24/7 mental health hotlines, “or maybe a list of free medications you can take advantage of, because a $4 blood pressure pill is a lot less expensive than a heart attack.”
Both agents and carriers that strive to innovate and “stay passionate about helping people,” Clevenger says, “are going to stay in the business and probably be very successful in it. But we all have to be very adaptable to change—that’s for sure.”
Jacquelyn Connelly is IA senior editor.