To gather the collective view of those closest to the daily buying and selling of health care in order to understand the current marketplace, the impact of reform, and how business models are shifting to meet the needs of the new, post-reform marketplace. What follows here is the channel's view of health care reform and some early indicators of where the market is headed.

The Coming Storm
First, agents and brokers believe reform is really going to happen. Congress is still making noises, a number of states are dragging their feet, and at least one court has declared the law unconstitutional, but none of this has persuaded the agent community that ACA is going away. Across the market, from individual agents to national account consultants, only 13 percent of respondents said ACA would be repealed.

On the other hand, only 13 percent thought it would be implemented on time and as written. A full 58 percent believe reform will be scaled down, while another 12 percent predict that implementation will be delayed. As for impact, reform is universally expected to disrupt health care distribution. Up and down the market, roughly half of all agents, brokers and consultants said reform will have a negative impact on their business.

In particular, small group and individual agents peppered the survey with commentary about reform's implications for commissions and migration to exchanges. “[If unchanged before 2014], the exchange will cause my business to dissolve” said a small group broker from Illinois. Meanwhile, an independent agent from Georgia had a slightly more optimistic take. “Health care exchanges could completely replace me, but then again, they may not!” this agent wrote.

“It depends how the state implements it.” Interestingly, for all its legislative drama, brokers saw 2010 as a relatively stable year for health benefits. Roughly two-thirds of respondents indicated their clients made either no material changes or minor buy-downs to benefits. That was a bit of a surprise: In last year's survey two-thirds of respondents predicted clients would be more aggressive in making changes to benefits in 2010.

What happened? Many brokers point to the legislative environment and the complexity of the law itself. They describe how clients spent the first three months of the year wondering about the legislation, and much of the remainder of the year trying to figure it out. “The complexity of reform and the political climate has made being in the benefits business a nightmare,” said one small group broker from Virginia. Uncertainty might have kept clients from changing benefits, but it created extra work for agents and brokers.

“[Reform] is causing us to take a lot more time with clients,” said one middle market broker from Illinois. “There is a lot of trepidation and uncertainty regarding what's going to happen…there's a need for more handholding time.” And reform arguably distracted the market as a whole from attending to important business.

As a small group agent from Washington put it, “Confusion and complication breeds inaction.” It's critical the market regain its focus on benefits strategies that best address root cause issues: unit cost and utilization patterns. Today, however, the calm is over, and the storm is on the way.

Brokers indicate the market is headed for a period of greater turbulence in 2011. This is particularly true in the lower end of the market, where roughly 60 percent of small group brokers and individual agents believe their clients will be more aggressive with buy-downs in the coming year.

A third of these brokers foresee they will have to aggressively shop carriers in order to meet the needs of their clients. “Medical insurance premiums will continue to increase at unsustainable levels,” predicts a consultant working with the middle market in Washington.

Don't expect to use up your vacation days this year. It will be a year with a lot of shopping, a lot of carrier disruption, and a lot of costs being pushed to the consumer. And that translates to a busy, difficult time for brokers.

Moving to Exchanges
Demanding customers and bigger benefit buy-downs are a serious concern, but health care reform poses a far greater threat: the potential migration of customers to the exchanges. We asked respondents what percentage of their clients would make the shift during the exchanges' first two years of operation (2014 – 2016).

Brokers in the individual market had the highest estimate — predicting 43 percent of clients would move to the exchange — followed by small group clients at 36 percent. But it''s worth noting that within each of these segments some brokers predict 70 percent or more of their customers in these segments would shift to the exchange. More surprising is the disruption brokers foresee from larger employers.

Respondents expect 24 percent of middle market employers to move to the exchanges, and just under 20 percent of large group and national accounts employers. It might be tempting to rationalize these numbers. (“Sure, some groups will move, but not all…”) But what happens if a few large, reputable firms make the move — and it works? Will others be slow to follow? 

The mood in the marketplace was ably summed up by Mike Brewer, president of Lockton Benefit Group, in testimony before the U.S. House Education & Workforce Committee's Subcommittee on Health, Employment, Labor and Pensions: “Many clients have told us, 'We won't be the first to drop coverage, but we won't wait to be third, either.”

The Impact of Reform
If customers move to the exchanges, what role, if any, will brokers have in serving them —and how will large-scale defections affect the remaining business? Our respondents had a mix of opinions. About one-third of small group agents see their role shifting out of health completely, while roughly another third see it expanding to include support of individual buyers.