As I was reviewing some of the top insurance industry articles for 2016, I came across one from Employee Benefits News that was in their top 10 (see below for link to the full article). It recaps the trend of small employers who have decided to discontinue their offering of group health insurance plans. Let's dig a little deeper.
According to this study, shouldn't we all be resigned to the fact that small employers are "getting out of the healthcare business"? If you are a small group broker, should you be looking for new markets or a new career? I don't think so. Looking at this from the a different perspective reminds me of that old story about two shoe salesman traveling to a third-world county: one reports back, "bad news, everyone here is barefoot so there is no market for shoes"; the other reports back, "great news, everyone here is barefoot so the market for shoes is unlimited!"
While the report of this data can seem like doom and gloom for insurance brokers who are focused on the small group marketplace, I'd like to propose that maybe all is not what it seems...
If I think about this decline of small employers offering group health insurance, I am wondering what some of the reasons might be behind it? Clearly there is the financial burden and immediate savings that can result in the reduction of expenses from an employer perspective. But what affect did the trend of small group carriers cutting or eliminating commissions to brokers have on this? If a broker can move a small employer to individual plans that are on/off exchange and earn more commission than small group medical plans, would they be incentivized to do so?
One thing that I've learned in my career of product development and managing distribution channel relationships is that: insurance products are not bought, they are sold. So while products have to meet a relevant and meaningful need in the marketplace, they also have to have compelling incentives for your distribution partners to sell your products. Sales people will prioritize and manage their time based on not only what is in the best interest of their clients (small employers), but also what is in the best interest for them personally. You may not want to hear this or may not be willing to voice this opinion publicly, but "what's in it for me" is a driving force in human nature, especially in a sales person's psyche.
While there is no question that small group health insurance options have diminished, product innovators have taken notice. The opportunistic view for 2017 is that the small employer marketplace is in need of, and is looking for serious help. And I know that the the market will respond. As an example, the rise of level-funded medical plans as core replacements and bundled telemedicine products as baseline alternatives continue to gain traction to try and solve this problem. Is there room for more innovative and alternative products to provide healthcare solutions to small employers? Yes, I think so!
I look forward to seeing what else the market will deliver. Perhaps this same opportunity holds true in the small employer marketplace for other products and services that are unrelated to healthcare. Regardless, I know that Coterie Advisors will be involved in building innovative programs and alternative ways to help small employers, and to serve their trusted insurance brokers.
Here's to new beginnings and new opportunities in 2017!
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Link to EBN Article: Small Employers Dropping Health Benefits