Large Group Roundup
Compiled by Thora Madden
California Broker contacted a couple of industry leaders to weigh in on the state of large group. Read on for their insights…
- What are the most important trends affecting large groups in California?
Chris Della Sala, Large Employer Practice Leader, Colonial Life:
Some trends in California impacting the large group market don’t vary to a great degree from what we see in other areas of the country. According to recent industry studies comparing 2019 over 2018 results, large groups are one of the primary contributing factors to a higher-than-expected growth rates in sales for voluntary benefits brokers (along with higher penetration and a greater volume of new accounts). This exceeded the overall sales growth of general benefits brokers during the same time period.
In my observation, relying on an insurance carrier to add value beyond competitive products at a fair price that drives penetration and new account sales is becoming increasingly important. It’s also evident that the trend toward the expectation of insurance carriers to provide benefits administration technology options, value-added services like student loan repayment and service funding, continues to trend upwards. As a carrier, we are often asked for funding for clients in the large group market.
According to Eastbridge’s annual voluntary benefits research study, brokers who target large groups are more frequently looking to carriers for funding to support technology solutions for their clients and I expect this trend to continue.
Rob Carnaroli, VP of Sales, Sutter Health Plus:
There are three main trends to watch in 2020 and beyond. The first is technology and innovation. There are a myriad of start-up companies seeking to improve traditional healthcare delivery, uncover new access points, make the member experience more seamless, and aggregate data for better decision making. Second, there is a wave of attention on mental health services and the partnerships needed with traditional medical providers to coordinate care. Finally, we cannot ignore the upward trend in pharmacy spend which continues to be a significant cost component of the healthcare dollar.
- What are the most effective ways to sell to large groups in California right now?
Della Sala, Colonial Life:
I always go back to value and as I stated above, I don’t see that it varies much state by state. It’s easy to find price and product comparisons, but employers and brokers want to know what else you are providing. For example, what enrollment methods are being offered (call center support, on-site enrollers, communication strategies, etc.)? What types of additional services (outside of insurance products) are available? Are there funding or technology solutions on the table?
The employer’s goal is often to not only effectively communicate benefits offerings to the employee base, but also attract and retain new talent. In the educator market, attracting and retaining critical talent is becoming increasingly more competitive – this is one area a broker can be incredibly impactful, by providing additional services.
Carnaroli, Sutter Health Plus:
Access to care is top of mind with large employers in today’s marketplace. Healthcare organizations that can offer new front doors to providers and clinicians is a great way to provide tremendous value to employers and their employees. Integrated delivery systems, such as Sutter Health, are best suited to deliver on this transformation with the ability to offer access points like walk-in clinics, video visits, virtual primary care and “fast passes” to availability. Wrap all of these with a shared electronic health record under the same delivery system, and the patient experience is unparalleled.
- Are you concerned about how self-insurance or direct contracting may impact large group?
Della Sala, Colonial Life:
Not particularly. The insurance industry has a way of adapting to the constantly changing climate. Does it present a challenge? Certainly. The gig economy and 1099 contract labor (as opposed to W2) is evolving and growing very rapidly and we do what we need to in order to adapt and respond to the changing environment. We are focused on these professional freelancers and are committed to understanding how to better serve that critical audience.
Carnaroli, Sutter Health Plus:
Over the past five years, we have seen a growth in value-based care and a slow decline away from PPO and fee-for-service models. Direct contracting in large group is still a niche market, with some notable Fortune 500 companies. Organizations like Pacific Business Group on Health and large regional employers are exploring these solutions. However, for the majority of large employers in California, it isn’t currently a viable option.
- What do you want agents/brokers to know about large group? (i.e. changes in compliance issues or other issues.)
Della Sala, Colonial Life:
Many brokers and carriers have their own definition of “large group.” It can vary from 50 lives, to 100 lives, to 500 lives and up – and market dynamics can change in each of those categories. For the purpose of this conversation, I’m going to use the definition of 500 lives and up to be consistent with our definition, which is also consistent with how Eastbridge looks at large-case business.
Large group business is more complex than down-market businesses. These businesses have unique needs, require creative solutions, have non-traditional demands, and do not fit inside a carrier’s typical client “box.” It requires breaking the mold of standard business practices, getting creative and often aggressive from a risk and solutions perspective. As I stated above, many times brokers and customers in this market segment are looking for funding, often in the form of a per-employee-per-month (PEPM) or license fee to offer a technology solution. We have seen this trend increasing for a while now and I fully expect it to continue.
Carnaroli, Sutter Health Plus:
Successful brokers and consultants thriving in today’s marketplace have figured out that the key to being relevant is to be a trusted advisor to clients. Just as stock brokers of old morphed into financial advisors, the large group market demands the same transformation in brokers—from transactional duties to a more consultative position. In addition, within the employee benefits space there is tremendous pressure for affordability which is challenging the status quo around commission payments. It is important for large employers to feel the full service brokerage/consulting house is providing a strong return on investment.
- Do you have any books you’re reading that you’d like to recommend to California Broker readers? It can be any book of any sort. Just let us know why you like it.
Della Sala, Colonial Life:
I don’t have any related to large group that I would recommend, but I am always a fan of Start with Why by Simon Sinek.
Carnaroli, Sutter Health Plus:
“Elon Musk” by Ashlee Vance is an incredible story of the most public entrepreneur of our time who is driving radical change across three different industries. His vision, perseverance, and belief that these industries must change in order to survive parallels what is happening in the healthcare space today. Small, incremental changes don’t work in healthcare; radical and bold innovations are the catalysts that will result in any meaningful progress. Those progressive companies willing to push existing boundaries will be in a great position for the future.