Like most brokers, CEBS fellow Norman Meullen doesn’t have a lot of patience for inflexible carriers or meddlesome regulators.
But after putting more than 30 years in the business, he doesn’t have time for hand wringers, either. I mean look at him, he looks as no-nonsense as a Dashiell Hammett gumshoe. He’s quick to point out that a floundering market presents more opportunities than perils. He’s also noticed that a lot of brokers — and employers — have gotten away from what he calls the basics when it comes to their benefits plans.
Benefits Selling: Over the last 30 years, things have changed. What’s been the most dramatic change in the business?
Norman Meullen: I think the biggest change I’ve seen is the narrowing of the market in terms of what’s available in terms of products. That’s certainly true in the health care field and the core benefit field, where we just don’t have the players anymore. When I started, you had at least 100 carriers. And today you’re down to five (depending on who you call the big ones, you know, five to eight of them that are left that are really out there in the marketplace). I think the other thing I’ve seen over the years has been the shift from the types of funding vehicles that have been used by the majority of the marketplace as well. And the last piece of it is really the type of benefit design that seems to be the hot button at the time. As an industry — and I tell this to my people all the time — we’ve been very good at reinventing old things and just changing the names. You know, consumer-directed health care today, if you get back into its roots, looks a lot like the old high-deductible comprehensive plans that were being sold in the late 1970s and early ’80s before managed care hit the marketplace. So I think those are the big three things that have changed over time is obviously the smaller market, the funding vehicles that are being utilized have changed as well as I think, you know, the shifts in the benefit designs.
BS: How do you see that changing over the next five to 10 years?
NM: I think the evolution of what will happen out there is going to depend a lot on the federal legislative issues we’re dealing with. I don’t believe today that the federal government can do anything but mandate; that’s it. I don’t think they’ve got the money to take it to a single-payer system. I think that might be somebody’s fantasy but I don’t think the realities of what we’re dealing with in today’s economy would allow that to happen. I see more of something similar to a Massachusetts approach where you have a mandated benefit requirement. But I think it’s very important for small-to-medium-sized employers to evaluate their existing benefit programs related to how they match up and support their goals and objectives. That is a weakness I have seen throughout my career in the small to mid-sized marketplace. The Fortune 500s have the HR people, they have the major consultants that sit down and try to move strategically with what they’re doing in terms of their total compensation approaches or their benefit approaches, but rarely do you see that, at least from what I’ve seen competitively out there, in the mid market or small employer. And I think they leave millions of dollars on the table because they haven’t thought strategically over time.
BS: What do they need to do to adapt to this changing environment from that perspective?
NM: One of the first things I think the broker has to be much more in tune with his clients in terms of what their business model is and what the needs of that business model is in regards to the quality of the work force that will support it. I think they have to look at where that corporation is now in relationship to its competition, such as where is their turnover relationship versus their competitors, what type of absenteeism issues they have. I think you’ve got to look at the overall human resource picture and then marry the benefits to where it’s going to actually change that picture for the better. And I think a lot of times the mid market, the smaller employer, have been so price conscious in terms of the product that they’re delivering as a benefit product to their employees that they sometimes miss the boat in the fact that what they’re offering isn’t what the employee wants to buy to begin with and they’re making guesstimates and no matter how good your broker is or how good your consultant is or how good your HR person is they’re more than likely going to miss the boat 50 percent of the time.
So I think that looking at how you can solve that problem is probably the wave of the future in terms of benefits. I think we’ve got technology today that we didn’t have 10, 15 years ago. We’ll allow a smaller employer or a mid-market employer maybe to look toward the model that we saw back from the big boys, full cafeteria style benefits, full flex benefits, and I think the marketplace will support that. They’re seeing this and I would tend to agree that in today’s world if you’re going to maximize the amount of dollars a corporation is going to spend in benefits, the only way I can see efficiently to do that is to get your employees involved in the buying decision. And if you’re not doing that then you’re not efficiently using a model that will give you the greatest bang for your buck in terms of benefit costs.
BS: Do you deal with any voluntary products at all or just strictly group?
NM: It depends on the client. What works for my client who’s in manufacturing doesn’t work for my client necessarily who’s in health care. You’ve got to structure the benefit offering to the needs of the given work force and do so as efficiently as possible.
BS: What kind of product requests are you hearing from clients; what are employers and employees looking for?
NM: I think employers and employees are looking for flexibility in terms of product offering. Once again, because of the “one size doesn’t fit all” reality out there, I think the more the market can adapt and be flexible, even within a single client’s own work force, as to product design, whether it be in health care options, whether it be in the various aspects of the benefit program offering related to what I would consider the other core benefits for life fail to be in short-term, long-term disability products. What I’m seeing is that my clients want the ability to even though they’re aggregating their offerings on a group basis they want to segregate it on an individual employee basis as much as possible.
BS: What do you expect out of the first 100 days of the Obama administration?
NM: My personal opinion is that the first 100 days is not going to see a tremendous impact in health care reform. There are much more problematic issues that we as a country have to address than whether or not we’ve got universal health care. I think that, ultimately, especially with his choice of Tom Daschle, you’re going to see some changes related to what I would think be new mandates for electronic transfer information or electric storage of health records. I think that’s going to be part of this play for sure.
In terms of benefit designs, I think they’re going to eventually come up with a pay-or-play approach to this where you will if you do not provide some minimal benefit scenario as an employer, you’re going to have tax consequences. But I would be shocked if you see legislation related to health care coming out in the first 100 days.
BS: What are your thoughts on how we’re going to make it through this financial crisis?
NM: There are two things I think might happen here. One, I think you’re going to see a hardening of the rates coming out of the carriers. I think that we [brokers] need to be prepared for that. Insurance companies historically … have always been money machines. And if their investments are in the tank — AIG is one example — I think you’re going to have to see some hardening of the premiums coming out of the carriers. I’m starting to see that in small groups, certainly in the Georgia marketplace, where the carrier increases are bigger than what you would anticipate considering that health care inflation has not been at the level it has been in the years past. So I believe we will see a hardening of the market, which obviously means that I think your client base is going to be more at risk because when you start delivering 20 percent increases, people suddenly start talking to other people and listening to other brokers.
But I also think this … bad economy presents an opportunity for brokers who know what they are doing to increase their business dramatically because people will talk to you. And in today’s world I’ll guarantee you every CFO out there will be willing to talk to anybody he thinks can make his bottom line better in terms of their business.