The Employee Benefits Broker of the Future

by Curt Howell, senior vice president, Leavitt Group Enterprises

There is a quiet revolution going on in the ranks of health insurance and employee benefits providers. With the Affordable Care Act putting pressure on companies to squeeze even more out of their health benefits dollar, many businesses are looking for benefits providers to provide extras that go above and beyond traditional services and offerings.

Whether in the form of advice, special programs, or number-crunching data solutions, many benefits brokers and consultants are responding to these new demands with innovative add-on services that help their clients save money while making the most out of the dollars they do spend on their employee health plans.

Full Services HR

One of the largest expenses for small- to medium-sized businesses is human resources. Fixed expenses such as federal and state taxes, health insurance, workers compensation, uniforms, and paid time off can easily turn a $14-per-hour employee into a $20-per-hour employee. Managing that extra $6 per hour can get costly.

As measured by the Small Business & Entrepreneurship Council, companies that employ 500 or fewer workers make up 99.7 percent of all U.S. businesses, and those with fewer than 20 workers make up 89.8 percent of all employers. The problem is, many businesses simply don’t have the budget for a full-time HR professional. This introduces an element of risk that can’t be ignored.

According to The American Genius, a publication for entrepreneurs, “Companies that don’t invest in dedicated human resources professionals could even be liable in litigation, in [that] they inadvertently break local, state, or federal laws regarding employee rights.” To help fill the gap, many benefits providers are stepping up and providing HR services in addition to their traditional health plan offerings.

For companies just starting out, the biggest needs are often basic services such as onboarding and payroll. Growing companies often need additional help with tax services and compliance. Providing self-help resources such as basic HR forms and fill-in-the-blanks employee handbooks can be a boon for a small businessperson.

Experienced Advice

Every business owner juggles two major concerns—running a business and keeping a business running. Finding customers, drawing up quotes, providing a service and maintaining an inventory are big enough challenges, but they become monumental when compounded by the need to stay up to date with constantly shifting government regulations and health care innovations.

According to Dr. Raleigh Seay Jr. of Seay Management Consultants, U.S. business owners have to deal with more employment regulations “than any other country in the world.” Seay points to rules dealing with wages and hours, equal opportunity laws and reporting, maternity leave, disability, and many other areas—and notes that the laws and reporting requirements often vary dramatically from state to state.

According to a recent count, there have been over 40 significant changes to the Affordable Care Act since it became law in 2010. Some have come through Congress, others by administrative action, and a few because of court outcomes. HR departments are turning to their employee benefits broker to filter out the noise and keep them apprised of the most important changes, including timely updates to help them navigate the shifting sands of the ACA and also deal with the penumbra of regulatory agencies involved in regulation and enforcement.

A recent study of the health care industry by the Deloitte Center for Health Solutions indicates that Americans spend well over $320 billion every year on prescription drugs. Pharmaceutical expenditures account for between 20 and 25 percent of all health care costs. This is another area where an employee benefits broker can help their clients make the most of their pharmaceutical dollars by connecting them with the right professional—such as Doctor of Pharmacy who evaluates prescription drug use and ensures that the most effective medications are prescribed and the correct protocols are followed. Having a “Pharm. D.” on staff helps clients—especially those with self-funded health plans—get the absolute best value from their prescription drug dollars.

These are just a few examples of the “above and beyond” measures that health care brokerages are taking, providing continued advice to create added value for the organizations they serve.

Health Benefits Meets Big Data

For years, health care prognosticators have been envisioning that the rise of electronic health records will lead to the increased use of predictive modeling in health care. In early 2013, citing new requirements of the ACA, Johns Hopkins public health expert David Bodycombe suggested that predictive modeling would produce “increased adoption and use of electronic health records (EHRs), … enhanced emphasis on population-based patient care management, [and] an intense focus on clinical, operational, and financial performance and cost rather than cost alone.”

Most businesses are interested in all of the above. Useful data analysis is only possible if health records are stored electronically, and the aggregation of these records can help produce better care as well as better outcomes. And it goes without saying that healthier people make better employees.

In most cases, data mining and predictive analytics are being used by health care organizations to forecast medical problems and improve care. By employing “big data” at the brokerage level, business clients forecast outcomes and manage claims before they even happen.

Professional data modelers like to joke about looking at a person’s Health Risk Assessment, cross-referencing his or her FICO and Google search history, and being able to predict whether the person will be healthy or ill. While it’s not quite as simple as that, the use of predictive modeling can help companies forecast future health benefit costs, identify at-risk employees, and help project the impact that changes in health plans can have on employee health care costs.

Effective analytics can indeed predict the “big three” conditions—heart disease, diabetes, and cancer—with an accuracy somewhere between 70 and 75 percent. Since treatment of all three of these health problems is much more successful (and much less expensive) when addressed early, identifying and modeling risk factors is key. When it comes to data modeling, an ounce of prevention truly is worth a pound of cure.

Company Wellness Programs

According to the Journal of Health Promotion, companies that implement a wellness program generally see benefits in three areas:

Lower employee absenteeism due to illness (27-percent reduction)
Fewer workers compensation and disability claims (32-percent reduction)
Improvements in overall health care costs (26-percent reduction)

In addition, a study by the Health Management Research Center (HMRC) at the University of Michigan found that businesses save $350 per year for each low-risk employee who remains low, and $153 for each high-risk employee who reduces his or her risk.

So why would any company not implement a wellness program? The simple answer is that wellness programs are difficult and expensive to create. A recent study by the Rand Corporation showed that it takes, on average, “five years for a new wellness program to become cost-neutral, let alone generate a positive ROI.” Smaller businesses often don’t have enough employees to take full advantage of such programs, and many company wellness plans fail because of poor design or bad assumptions.

Because of all this, some employee benefits brokers are getting into the “wellness game.” By providing their clients with turnkey solutions to a more or less universal need, they can turn an up-front investment (in both time and resources) into a continuing benefit for clients. Under the umbrella of the benefits provider, smaller companies can join forces to reduce risk. Consequently, wellness programs can be the differentiating factor that prompts clients to select one benefits broker over another.

Adding Value

In medieval England, bakers began the practice of giving their customers 13 loaves for every 12 purchased—the traditional “baker’s dozen.” They did this both to promote goodwill with their customers, and also so they didn’t run afoul of laws regulating the weight of a loaf and the content of wheat in the bread.

The same factors, goodwill and government regulation, are prompting employee benefits providers to provide a new kind of “baker’s dozen”—in the form of add-on products and services that help their clients save money and be more successful. It’s safe to assume that, if this trend continues, the benefits broker of the future will offer even more services in order to stand above other providers as an indispensable business partner and resource.

Curt Howell is a senior vice president with Leavitt Group Enterprises. He has previously held leadership roles with Fortune 100 companies in the managed-care industry such as United HealthCare and Humana, where most recently he served as a regional market president overseeing commercial operations in Arizona, Idaho, Nevada and Utah. He holds a Bachelor of Science in Biology from the University of Utah and a Master of Health Administration from the Medical College of Virginia.

Leavitt Group provides expertise on employee benefits, insurance, and risk management to clients. Additionally, the company has an on-staff health care reform attorney, a Doctor of Pharmacy (or “Pharm D.”), a professional wellness team managing a robust wellness program, data analytics tools to evaluate health risks and solutions, compliance support, HR support, and other key resources.