In September, Deft Research published the 2015 Group Health Benefit Decision-Makers Study. In this report, we present a 2016 benefits outlook, shedding light on what U.S employers at small to mid-sized firms have in store for the year ahead.
KEY FINDING. For reasons related to legacy systems of underwriting, carriers usually break their employer group markets into groups by size. This convention has been bolstered by the application of the Affordable Care Act (ACA) to employers depending on their size. So, it makes sense that much discussion of the employer market focuses on the size of organizations (number of employees).
The study finds reason to argue that this convention may need to give way to characterizations of employers that use more than just size. Instead, factors like annual employee turnover and anticipated revenue growth have more impact on the directions employers want to take, their demand for solutions, and their tolerance for premium increases.
FACTORS THAT AFFECT EMPLOYERS' BENEFIT STRATEGIES
- Anticipate revenue growth
- Expect premium increases greater than 10%
- Has a multiple year contract w/premium calculation formula
- Use an agent or broker
- Has low satisfaction with existing options
- Has low satisfaction with insurance sales and distribution
- Has the ability to respond to the ACA's requirements
- Annual employee turnover
According to the study, employers whose revenues are expected to increase, are more likely to value health benefits as a way to stay competitive in the labor market. Employers who expect lower revenue growth, do not value benefits as much. In considering just the first bullet, the study provides a way to dissect the market into meaningful groups with differing needs.
Low-growth employers also tend to be less satisfied with their insurance agents. At the center of this is the finding that their agents have exposed them to fewer cost control and benefit enhancement solutions. This group of employers has not seen many alternatives, and are consequently more pessimistic about their capacity to adopt something new—and their insurers’ capacity to present it.
None of this has much to do with the number of employees or the industry of an employer.
If breaking the employer market into small, mid-sized, and large employer groups is an approach that doesn’t capture the various needs of employers, then the health insurance business will feel some pressure to re-organize around different classifications that lead to better client service.
Complete the form below to download a free Executive Research Brief from the study that suggests 3 approaches insurers can take to better meet the needs of employer groups.