Hogan Knows

For those of you worried about your future and the future of private health insurers….read this study.  It is pretty interesting and more optimistic than many of the prognosticators on the subject.  The analysis basically sees employers staying invested with private health plans and not moving en masse to state created exchanges.  It also speaks to the need for payers to become more strategic and innovative as they partner with key brokers to get their value message out to plan sponsors.

“Booz & Company research suggests that traditional employer-based insurance will remain a significant market that will erode more slowly and less steeply than commonly thought.”

“More generally, healthcare reform will unquestionably lead to a larger overall market for health insurance. Based on our scenario modeling, nearly 25 million uninsured people will obtain coverage after 2016. The majority, nearly 60 percent, will enter a vastly expanded Medicaid program, about 28 percent will get individual insurance primarily through new health insurance exchanges, and the remainder will enroll in existing employer group plans.

The eventual size and long-term viability of the employer group market will be determined chiefly by the success of new state and regional health exchanges. These will inevi­tably attract not only the uninsured, but also some people currently cov­ered by employer-sponsored insur­ance. There are open questions, such as whether smaller employers (those with fewer than 50 workers initially, 100 eventually) that are eligible to participate in the exchange will switch from the group market. Some observers expect that the introduc­tion of exchanges and significant fed­eral subsidies for individuals (earning as much as 400 percent of the federal poverty level) will lead a significant number of businesses to “dump” employees by dropping coverage or to “switch” them into employer-paid exchange plans.”

“Second, health plans should partner more closely with their key brokers to jointly manage and support the group business. While brokers can expect volatility in the micro business segment, larger companies are likely to maintain their long-standing relationships with brokers, whom they perceive as trusted advisors. Our research also suggests that, given the complexity and importance of the health insurance purchasing decision, health insurance brokers will continue to provide a service to companies by helping them sort through the complexity to find value. In this role, they will be more akin to real estate agents, who have retained a place in their industry, than to travel agents, who have been largely disinter mediated by online solutions. Health insurers should redefine their broker engagement strategy from today’s transaction-based model to a strategic partnership model. For example, top-performing brokers, armed with the proper incentives, tools, and other support mechanisms, could more directly advise companies, a role traditionally held by benefit consulting firms.”