But now that the Patient Protection and Affordable Care Act is the law of the land, much more is going on than can be addressed with baseline calculations about per-employee costs for health insurance.
The insurance industry itself is changing as players attempts to grab market share before 30 million new customers—the former uninsured—start pouring into the client base, some as early as this fall. The ripple effect means changes, as well, in the relationship between small businesses and carrier.
Insurers who are most nimble in embracing the changes and altering their business plans to accommodate them, industry professionals say, will not only strengthen their organizations relative to competitors, but will outlast some, as well. For in an ironic twist to legislation touted as an improvement in the range of Americans’ health-care choices, one potential outcome could be further consolidation of the insurance industry.
“Carrier shakeout is something I think will happen,” said CEO Tom Bowser of Blue Cross Blue Shield of Greater Kansas City, “but I think it will happen over a period beginning in 2011, and the biggest shake will happen in 2014, when people will be able to buy through the insurance exchanges” that will be set up in every state.
In the meantime, major insurance players are moving quickly to address literally hundreds of questions and issues stemming from a 2,000-page bill that underwent little public scrutiny before passage. What they’re finding is that, thanks to this nudge from Washington, their business clients are turning to them for answers as the law unfolds in stages over the coming decade.
What are they conveying to their insurance providers?
“Anxiety, concern, confusion are the things that are rippling throughout the employer community today,” Bowser said. “We’re not seeing any mass movement or throwing in the towel and ending employer-sponsored health plans. But there is a high level of interest in terms of trying to anticipate costs and the costs of requirements.”
Other providers are experiencing the same reaction.
“From our standpoint, our clients are needing us more now than ever,” said Jeff Spencer, regional managing director for Holmes Murphy & Associates. “They’re looking to us as advisors, asking what it means, who it will impact in the future, and asking, ‘How can you help me as 2014 gets here, and what am I going to do to be in this game or out of the game?’
Whether they remain in or opt out, the biggest issue for employers right now is finding any hidden land mines not only in the massive piece of legislation, but seeking them out as the implementing regulations are rolled out. That’s making it difficult
to move quickly.
“Employers are challenged by the lack of written regulations from the government,” said John Manley, employee benefits practice leader for Willis of Greater Kansas. “The volume of information in regard to the new law has been burdensome to our clients as we try to effectively develop communication strategies with each client.”
Lack of formal, written regulations has prompted many Willis clients to adopt a wait-and-see approach on compliance and other wholesale change, Manley said—even though the first phases of reform are scheduled to take effect in September.
“Not surprisingly, the collective response we have seen,” he said, “has far exceeded any other employee benefit issue we have discussed as measured by participation in our client Webinars and seminars on this subject.”
As for early assessments of the law’s impact on various client business sectors, Spencer said it was clear that some companies would be positioned to seek competitive advantages.
“A lot of people, when they hear you can pay $2,000 per employee and opt out, vs. a cost now of $7,000 or $8,000, at first blush, they’re going to say, ‘I’m out.’”
He cited the construction industry, in particular, with the constant demands for submitting bids on work they seek. “If I’m a construction company and I opted out and pay that $2,000, and your company stays in the game, my bid is generally going to be better, and you’re going to have a hard time competing,” he said.
Less likely to take that tack, he said, would be professional services firms, such as those in the legal field, advertising or accounting, where services aren’t as price-sensitive as they are for contractors.
Whether they’re positioned for growth because of the reforms, or whether they’re facing operational challenges because of those requirements, insurers largely have taken the position that the best business strategy at this point is to get on board with the changes and leverage them into as much additional business as possible.
“We are trying to implement the law and be a trusted, reliable, and unbiased source of information for employers and individuals, and I think that’s the only way you can play it,” said Bowser. “The debate is over.” 