The Demise of the Small-Group Market? Exchanges Will Reshape It, but Won’t Kill It

[fusion_text]Benefitter was recently profiled in AIS Inside Health Insurance Exchanges. Full article available here. Check out the excerpt below.

A large segment of small employers are expected to drop health insurance coverage, according to a recent survey of more than 1,000 insurance brokers conducted by Benefitter. The survey found that 17% of brokers expect at least a quarter of their clients will drop coverage in the coming year. Nearly 75% of surveyed brokers reported average rate increases in the double digits — more than one-third say they saw at least one rate hike of more than 60%.

But Jon Gabel, senior fellow at the University of Chicago’s National Opinion Research Center (NORC), counters that he’s seen little indication that small employers are being rocked by dramatic rate hikes. Instead, he explains, companies tend to switch plans or carriers when hit with a large renewal increase. About 50% of small employers shop for new coverage each year, and about 20% of them switch, he says.

Brokers Are Nervous
While the small-group market isn’t going to disappear, it is changing, which will force agents and brokers to change their business models. Some, for example, will focus greater attention on the sale of ancillary products. While some brokers will watch that part of their business go away, others will work to offset the loss by helping those employees find coverage through the exchanges. Still others will take it a step further by selling supplemental products and thinking more holistically about
the consumers, says Benefitter CEO Brian Poger. The California-based technology company helps brokers and employers find individual health coverage. Poger previously was a general manager for Aon Hewitt’s private exchange business.

As the market changes, brokers will need to think outside the box. Administering individual plans can be cost prohibitive because brokers need to spend a lot of time getting quotes for different products. Brokers who thrive in the new environment, according to Harris, will be those who build or buy software that can streamline some of that administrative process. “Like any industry, in chaos, there is tremendous opportunity with change,” says Harris.

As workers move from small-group policies to individual plans, carriers will need to maintain relationships with those employers. Carriers should support their small-group clients by helping their workers find individual policies either on or off of the public exchanges. “As an employer, you still want workers to see health coverage as an employee benefit. Technically, the employee is buying directly from the carrier, but the education and enrollment should remain at the place of employment. That way, if they want to move plans, if group plans become more cost effective, [the carrier] has the ability to bring those people back in.”

To see a copy of the Benefitter survey, click here.[/fusion_text]