As toilet paper became more valuable than a barrel of oil during the first months of the pandemic, the natural reaction for many businesses was to freeze out of fear and do nothing. We could all relate to the Saturday Night Live cast right after 9/11. When and how would it be safe again to continue?
Milliman, a leading actuarial firm, estimated hospitals and other healthcare providers experienced 30-60 percent reductions to their business from services that will either get deferred or eliminated altogether.
An industry that was doing well before the pandemic and during it has been the health insurers. They are beginning to alert clients they will be issuing monthly premium credits. This in anticipation of not meeting the mandatory loss ratio rules under the Affordable Care Act (ACA) due to the impact of COVID-19. This has created a boon for health insurance companies and self-funded employers that have taken in more dollars than they have paid out in normalized years.
How Will 2021 Employee Benefits Renewals Be Impacted?
For 2021 renewals, this will mean many employers will likely experience a rate pass to lower single digits on their corporate benefit plans.
As we begin to regain our footing, employers should reconsider the notion that a carrier’s rate actions should impact long-term strategic planning as it relates to health and benefit design and offerings. Here are a few reasons why it might be expensive to do nothing:
Play Your Hand at the Right Time
As a former healthcare underwriter, I would often see inexperienced agents playing their clients’ hand at the wrong time. When employee benefits costs would spiral out of control and rate increases issued, the agent then went to market seeking alternative bids. The wiser among us played our clients’ hand less frequently when the losses are favorable. For many employers, that time will be in 2020 — not when there is anticipated resurgence in 2021.
The Health Insurance Marketplace Is Hungry for New Business
The marketplace continues to innovate with meaningful solution providers who are innovating with better mousetraps. We enjoy helping our clients lock in favorable terms when the marketplace is experiencing turbulence, not ebullience. There will be service providers hungry this year to compete with favorable terms, pricing, and guarantees, wanting to put new business on their books.
The Group Market Will Take Leads from Consumer and Retail Markets
For most employers, there will be a renewed interest in finding value and reducing expenses. As my colleague Brooks Deibele shared in our last blog, there are ways to lower health insurance costs with innovative design and network options without burden shifting. The individual marketplace has shown us that consumers value savings over more doctors and hospitals in a network. The right steerage for employers can create 10-20 percent savings in metro areas where there are competing health systems.
Think Ahead about Your Employee Benefits
American author and pastor John Maxwell once said, “The pessimist complains about the wind. The optimist expects it to change. The leader adjusts the sails.”
The cost of maintaining the status quo can be expensive with pent-up demand resurging in 2021.
Holmes Murphy stands ready to help you ‘Think Ahead’ and adjust the sails of your business through innovative insurance, reinvented health solutions, employee benefits, and alternative risk solutions. When better is possible, then good should no longer be an option. Reach out to us to see how we can help you.
