This year's BenefitsPRO Health Care Survey reveals an industry that has weathered years of change and disruption relatively well, leaving brokers feeling positive about their businesses and the future. However, some uncertainty remains; concerns about disruptive new innovations, regulation and consolidation provide some storm clouds on the horizon. But for the most part, brokers seem to find the sailing manageable, if not always smooth.

Setting the scene

Nearly 400 benefits professionals responded to this year's survey, the highest response in the past three years. Respondents identified themselves as filling a variety of roles: consultant (24 percent), general agent/managing agent (19.6 percent), brokerage employee (19 percent), brokerage owner (19 percent), other (14 percent), and carrier executive or representative (4.5 percent).

Smaller firms dominated the survey; 48 percent of respondents said their firm had 1 to 5 employees, and 17 percent listed 6 to 25 employees. However, large companies were well represented—12 percent of respondents were from companies with more than 1,000 employees, and 11 percent were from companies with 101 to 1,000 employees. Meanwhile, 6 percent of respondents said they were from companies with 26 to 50 employees.

The survey also asked respondents to break down their book of business by premium volume across customer segments. The responses favored individual and small group sales: respondents' agencies on average had 35 individual accounts, 49 small group accounts (2–100 lives), 27 mid-market groups (101–5000 lives), 16 large group accounts (501–3,000 lives), and 12 national accounts (3,000+ lives).

Scroll past the infographic for a more in-depth view of this year's findings, or click to jump to one of the following sections:  Broker business | Regulation and politics | Disruption and technology | Private exchanges | Self-funded growth | Wellness & voluntary

Business is good

Brokerage firms reported losing relatively few accounts over the past year. When asked about losing clients in different segments of size, the main answer was “not applicable (NA)”—52 percent said NA in the small group segment, 75 percent said NA in the mid-market share; 86 percent said NA for the large group segment; and 92 percent listed NA in the national account segment.

The only areas with significant losses were in the small group and mid-market segments: 28 percent of respondents reported losing 1 percent to 24 percent of clients in small groups. For losses in the mid-market groups, 20.5 percent of respondents said they lost 1 percent to 24 percent in that segment.

When asked to predict whether they expected the percentage of groups dropping coverage to increase, decrease, or say the same, 71 percent said they thought things would stay the same; 17 percent expected business to increase a little; and 3 percent thought business would increase a lot. Only 8 percent and 1 percent said that business would decrease a little or a lot, respectively.

Regulation and politics

The gradual evolution of the ACA from regulatory earthquake to bump in the road continued over the last year, and brokers seem to deal with the ACA much more easily now that they've had nearly a decade to get used to it.

There is still a role for agencies in helping individuals on the ACA marketplaces, but it only affects about 43 percent of respondents, and less than 5 percent of respondents reported a “very strong” demand for help from people buying plans on the individual marketplaces. A clear majority of brokers are not subject to demand for help from individuals on those exchanges, as the “None/My book of business does not handle individuals” answers totaled just over 57 percent of respondents.

And the reason is pretty clear: When asked if the compensation makes it worth the effort to enroll individuals on ACA exchanges, 11 percent of respondents said yes, 59 percent said no, and 30 percent said it did not apply to their business. It seems respondents simply do most of their business elsewhere.

Of course, the ACA still has relevance outside the individual exchanges. When asked whether clients have become more reliant on brokers for ACA information, compliance and similar topics, 46 percent of respondents strongly agreed, 37 percent agreed. Less than 4 percent of respondents disagreed or strongly disagreed.

The survey focused heavily on regulatory impact, but also asked about the future of the ACA and of the president who has vowed to dismantle it. When asked about where they thought health care reform would end up in the next few years, 30 percent expected a repeal of the ACA; 63 percent expected ongoing revisions to Obamacare; and 7 percent expected a move to a single-payer/Medicare for All health system. Those numbers are similar to last year's survey, except that in 2018, 12 percent expected a move toward a single-payer system. It's possible the media spotlight on Medicare for All proposals has made respondents more aware of the difficulties that would arise in moving to that type of health care system. Respondents overall were more positive than negative about Trump's presidency: When asked about the president, 17 percent said his leadership has been extremely positive for their business; 26 percent said somewhat positive; 33 percent said there had been no impact; 16 percent said somewhat negative; and 8 percent said Trump's presidency has had an extremely negative impact on business.

Disruption and technology

Disruptive change in the industry is clearly on people's minds. The survey found that 44 percent of respondents found the rise of “disruptive” companies somewhat concerning, while 7 percent said they were “a grave threat.” But about half of respondents are less concerned: 25 percent said the issue was not worth thinking about, while 24 percent agreed that they were a “much-needed wake-up call.”

The survey went on to ask about disruptive innovations such as Amazon's Haven venture. Asked to pick from a list of possible outcomes, respondents were mainly positive or neutral: 4 percent said such efforts would drastically improve health care in the U.S; 43 percent said they would bring moderate improvement; 26 percent expected there would be no effect; 20 percent said such ventures would cause moderate harm; and 6 percent said such innovations would drastically harm health care.

The use of digital tools to deliver and administer employee benefits continues to be popular. A strong majority (67 percent) of respondents said they agree or strongly agree that offering technology-based benefits administration and/or online solutions is “critical” to their business. This answer is similar to responses in the last two surveys.

Focusing on enrollment, 52 percent of respondents say that their clients' employees use an online tool to independently select and enroll in benefits. However, meeting with a broker or enroller in a group setting is still common; 41 percent chose that answer; 39 percent said enrollment was handled by brokers/enrollers in a one-on-one setting; 22 percent that employees meet with an HR advisor; self-enrollment options such as a call center were listed at 13 percent; and “other” was listed at 7 percent. This question allowed for up to two answers, as businesses have many choices when it comes to enrollment strategies. And the survey suggested that online enrollment is somewhat evenly represented among employers. The largest segment of respondents, at 30 percent, said that 1 percent to 24 percent of their accounts use an online electronic enrollment tool. Other segments of utilization—25 percent to 49 percent; 50 percent to 74 percent; and 75 percent to 99 percent—were all in a range between 16 and 17 percent of accounts. Nearly equal numbers said none of their clients used electronic enrollment (10 percent) or all of their clients used electronic enrollment (10.5 percent of respondents.)

Private exchanges still a niche market

Private exchange numbers have held somewhat steady in recent years, but it remains a strategy supported by a relatively smaller number of brokers. Sixty three percent of respondents said they do not work with a private exchange—an increase from the 2018 survey, when 56 percent said they did not utilize private exchanges. Just over 1 in 5 respondents (21.5 percent) said they worked with one private exchange partner; 14.5 percent said they work with two or more private exchange partners.

In addition, when asked if their firm had invested in a proprietary private exchange technology, 90 percent of respondents said no, while just 10 percent said they had done so.

However, there are some positive signs for private exchanges: When asked about predictions for different scenarios, nearly 44 percent of brokers said private exchanges would have a positive impact on their business performance over the next three years. The other prospect with strong positive marks was the idea of new entrants to the market, such as national retailers, with 31 percent of respondents expecting a positive impact. As for negative developments, the prospect of payroll companies expanding into the benefits field was seen as likely to have a negative impact by more than 41 percent of respondents.

Self-funded plans continue to grow

Despite a strong groundswell of support and lots of buzz, self-funded plans remain in the minority—the survey found that respondents who said their book of business had no clients with self-funded plans or less than 10 percent equaled almost half the brokers in the survey (49 percent). None of the other answers drew above 15 percent—but there was a steady minority: Brokers with 10 percent to 24 percent of self-funded clients came in at 15 percent of respondents. Brokers in the 25-percent-to-49 percent and the 50-percent-to-74 percent groups both had a little over 11 percent of their clients using self-funded plans. And 13 percent of brokers said 75 percent to 100 percent of their clients were self-funded.

Respondents also see self-funded plans as an area of growth: 47 percent of brokers said they expected their self-funded business to moderately increase; 5 percent expected drastic increases. Forty-five percent said their self-funded business would stay the same. Just over 3 percent of respondents said that self-funded business would decrease to some extent.

When it comes to fully funded plans, respondents said they prioritized price; network breadth and strength; and service as the top factors they considered when recommending an insurance carrier.

Wellness, voluntary remain a priority for brokers

The survey also explored how brokers were thinking about products such as wellness and voluntary benefits. The survey asked if brokers offered or were planning on offering products in three different areas: consumer engagement and wellness programs offered by carriers; engagement and wellness programs offered by third-party groups; and promoting ancillary insurance products such as life and disability insurance.

The support for health/wellness/consumer engagement programs were somewhat split: 57 ///percent of respondents said they offered or would offer carrier-based products of that type, 40 percent said they would offer those products via third-party vendors. As for offering ancillary products, 80 percent of respondents said they offered or would offer those products.

Ancillary benefits remain a big draw for employers, and many companies offer such products. But interest remains highest for certain types of benefits: Respondents reported they expected a high volume of business in dental plans (48 percent), vision (44 percent), life insurance (44 percent), disability (30 percent), and critical illness/hospital indemnity/gap medical insurance (27 percent). Brokers said they also expected a lot of business from retirement products (15 percent). Products such as legal products, long-term care insurance, and student debt repayment drew single-digit responses.

In the area of voluntary benefits, or products that are offered as benefits but paid for by the employee, price remains an issue. More than 61 percent of respondents said lower prices would be one of their top two considerations for offering more voluntary benefits. More simple/convenient enrollment options also ranked highly.

On a similar note, when asked what criteria they would use to select an ancillary carrier for clients, 51 percent of respondents ranked low-cost product options as a top-two consideration, while convenience and simplicity was a top-two consideration for 42 percent of respondents.

Summing up

Looking at all those numbers, it's fair to say that benefits advisors and their employer clients are dealing with many complicated issues and challenges. But some basic facts seem clear: change is a constant; the insurance industry is not getting any less complex, and clients will continue to depend on brokers to help them deal with that change and complexity. Check back next year for more on how the industry continues to evolve.