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2025 Insurance Talent Trends Guide

From embracing AI to creating personalized onboarding experiences, we’re expecting to see a number of interesting trends impact the insurance industry in the next year.

Download our latest guide to learn the trends we anticipate will have the most impact on the insurance industry in 2025.

Employee Engagement: Getting Back to Basics for 2025

Discover ways to combat quiet quitting. Strong employee engagement impacts your company’s ability to meet its goals, while also creating a motivating and positive atmosphere for your employees.

Download the whitepaper to explore how revisiting the core principles of employee engagement can reignite team morale and drive lasting success. 

Executive Relocation in the Post-Pandemic Era

Remote and hybrid work have become standard in the past few years, and many executives have valued these work arrangements. They have found it can significantly improve work/life balance while still allowing them to be very effective in the workplace.

Read our blog post for insights on the effects of executive relocation and questions to consider before making the move.

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Labor Market Direction Question from Compass

I penned the article in this quarter’s Compass, our executive newsletter, detailing my thoughts on the labor market recovery and expanding on some of the ideas you have read about in this blog. The response to this article has been terrific – and we really appreciate the feedback – and included a thought-provoking question that happened to be asked by a few different people. I’ll paraphrase: Does the rise in temporary employment really suggest general job growth or is this a reflection of a new paradigm in the labor market whereby organizations shift their labor mix toward temporary staff? This is an intriguing hypothesis and one that I have heard about before. Even the SIA has recently predicted higher temporary penetration rates than ever before in the future. That said, I remain skeptical that we are seeing the beginning of a new paradigm and that the growth in temporary jobs since September portends anything markedly different than what it has meant in the past: coming job growth. The nature of a dynamic economy is to reward specialization and efficiency. It is accepted fact that both of those traits require workers who know and understand the niches or micro-niches they serve very well, but I further postulate that organizational knowledge is equally important for most day-to-day business. While I believe strongly in the value that can be provided by temporary expertise at all levels – for the very same reasons of specialization and efficiency – much of the knowledge required by organizations for day-to-day business is organization-specific; thus it is hard for me to envision a wholesale change in the current balance between temporary and more traditional employment. As I pointed out in the Compass article, the numbers seem to be just now starting to affirm the job growth story. This morning we had one more piece of confirmation – the NABE (National Association of Business Economists) released their April Industry Survey, which highlighted expected job growth. Within The Jacobson Group, we continue to see demand for both temporary and traditional staff at much higher levels than 2009. What are you seeing?

BLS Labor Market Data – Sources and Discrepancies

In my last post, I promised a look at the BLS (Bureau of Labor Statistics) labor market data and where it comes from. I am going to start with a primer on the data quoted most often and where it comes from. If you know this or simply aren’t interested in the details, feel free to skip to the next section. Employment Data Primer There are two main data points that are picked up by most media outlets: the Unemployment Insurance Weekly Claims Report, which is reported every Thursday morning at 8:30 ET, and the monthly Employment Situation Report, which is reported the first Friday of every month at 8:30 ET. The Unemployment Claims Report compiles UI claims data from all states to provide both the number of new unemployment claims (claims filed by individuals who are newly unemployed) and the number of continuing claims (all those who are collecting unemployment from the state UI offices) for the previous week. However, the headline numbers that are reported leave out a very large subset of people who are currently receiving benefits: those who receive benefits through the various federal UI extension programs, of which there are quite a few. The biggest of those programs is the Emergency Unemployment Compensation Program or EUC – more detailed information on the EUC can be found here. The government does report the numbers for those claiming benefits from the various federal programs separately but within the same report. The monthly Employment Situation Report is a complex report that relies on two distinct surveys: the Current Population Study (CPS) and the Current Employment Statistics Survey (CES), known colloquially and respectively as the household survey and the payroll (or establishment) survey. There is a lot of data released in this report; but the headline unemployment rate (U3), which comes from the CPS, and the total non-farm payroll, derived from the CES, are the most noteworthy and widely-circulated numbers. The CPS is a survey of approximately 60,000 households and is anchored to the one week period which contains the 12th of each month. The CES is a survey of 140,000 businesses and government agencies representing over 400,000 worksites and is also anchored to the week that contains the 12th of the prior month. The Discrepancy Aside from the headline numbers that each survey produces, both surveys produce a lot of other data. While the CES is the source of official BLS data on employment count, the CPS, or household survey, also produces a count of employment. Interestingly, these data points diverge quite a bit and for many reasons. In the past two months there has been a significant divergence between the change in employment numbers reported by households (CPS) and the change reported by establishments (CES). On a seasonally-adjusted basis, while the well-circulated CES has shown losses of 62,000 jobs, the CPS has shown job gains of more than 800,000 jobs! I should point out that each survey has its respective strengths and weaknesses; and generally, the CES is considered the more accurate source of data with respect to total employment count, in part due to an annual reconciliation process with unemployment claims data that often leads to rather large revisions in March for the 12-month period that ended the previous March. However, because of the limitations inherent in collecting information on company start-ups and companies ceasing operations, the CES relies quite a bit on what is called the birth/death model; and this model can be highly inaccurate. This model is the subject of a fair amount of controversy. There is enough uncertainty to suggest that it may be significantly understating the number of new jobs created during a time of entrepreneurial renewal. Furthermore, the monthly CES data is subject to a number of revisions, including the aforementioned reconciliation with UI data – interestingly, the most recent reconciliation led to a 900,000 job revision (downward) for the period ending March 2009. My point in all of this is that the household data MAY be confirming what our organization is already seeing in real-time – an accelerating demand for labor (at least in the insurance industries) that is not yet reflected in the official BLS data. As I have mentioned, we saw demand begin to uptick in October and then really intensify after the New Year. If you are interested in more information on the discrepancies I Cite, the BLS has done four studies over the past 50 years to try to understand these discrepancies. The most recent of those was published in 2006 and can be found here.

Capitalistic Renewal is Leading to Job Growth – RIGHT NOW!

(3rd follow-up post to the 2010 Impact Survey results: U.S. Labor Market) When I graduated college in 1994, the job market was in the early stages of a healing process that began in late 1992 or early 1993. There was significant apprehension among us graduates as all the media talk was about the ‘jobless recovery’ and how hard it was for new graduates to find work. Even in my field of mechanical engineering – which was considered somewhat immune from cyclical windstorms – there were widespread stories of mass joblessness. By the time graduation rolled around, virtually all of my fellow classmates who were seeking employment had found it. Our fears were unfounded. Until the rumblings of Northern Rock awakened us to the shaking bedrock beneath our feet, we Gen-Xers had been extremely fortunate since we joined the workforce. There had been some hiccups – the early 90s and the early ought’s – but as children of the Great Moderation, our road for the most part had been paved smooth with the asphalt of ‘enlightened’ monetary policy. The shaking of Northern Rock turned out to be the harbinger of a major quake that has opened up a chasm at our feet and, in the process, changed our perceptions of the world. If you open up a newspaper, magazine, Kindle, I-Pad, or website today, you will find the evidence of our new perspective. “Decades before we recover the lost jobs,” “a ‘New Normal’ of persistent low growth,” “the end of American pre-eminence,” “China is the future” – all predicted with the faith of fact. It is a wonder that we all decide to wake up in the morning. I have three arguments with the seeming consensus of our greatly exaggerated demise and thus with the accepted view of the labor market. First, I believe that the Austrian School’s process of creative destruction provides the fertilizer of capitalism. Innovators power the economy by bettering their larger, slower, more complacent dominant rivals. Today’s social mood is part of this endless process of renewal and innovation. The greatest motivation entrepreneurs possess is the desire for a better existence – and as faith in what we thought we knew has broken down, there are many more smart, motivated people now seeking a better existence. There is no question in my mind that the upheaval of the past three years has provided an elevated level of entrepreneurial risk taking. Second, I believe that in today’s environment all economic performance is relative. As globalization has taken hold, the relative performance of economies has taken on greater and greater significance as products, labor, capital, and even knowledge can now flow relatively freely to the area of greatest demand. If you agree with this perspective, the most important determinant of the success of a country will be its infrastructure to support capitalistic endeavors. I would argue that this infrastructure must include strong personal property rights, intelligent regulation to protect the mission-critical systems (i.e. financial, transportation, etc.), and a commitment to the free market as the primary driver of wealth creation. Comparing the U.S. to any other country in these areas yields a pretty good result – for now. Finally, I will give you my ‘main street’ view of labor demand. Things are changing and the pace of change is accelerating. In October, I provided a cautiously optimistic outlook for the labor market in the three insurance industries. Since that time, demand has continued to pick up for our temporary services, rather dramatically so since January. Beginning in January, we have also seen increased demand for our recruiting and search services. While demand in this area is only beginning to increase, the very strong historical relationship between temporary staffing and subsequent employment growth (3-6 months typically) seems to be holding. I will again caution that I can only speak to the experience of one company that serves only three related industries; but in my experience, it is fairly unusual for our industries to tell a very different story than the rest of the economy when it comes to labor demand. My cautious optimism is becoming less cautious. In my next post, I’ll talk more about the labor market and the way the government measures it. In the meantime, I would love to hear about what you are seeing.

What I Learned About Healthcare Reform in B-School…

(2nd follow-up post to the 2010 Impact Survey results) During my first year of business school, as part of an Organizational Behavior class, I was a member of a small team that implemented an organizational alignment analysis on a local non-profit, The United Negro College Fund’s Chicago area office. The UNCF has done some wonderful things since its inception, but back in the late nineties the Chicago office was having some challenges. Our project was an in-depth look at the operational and fundraising challenges in Chicago, and our team ultimately delivered a series of concrete steps to redress the issues. While I believe we offered some well-thought-out suggestions that (hopefully) may have made a difference to the organization, the real beneficiaries in this exercise were us students. We were able to work directly with senior members of the UNCF organization and were provided tremendous access to the staff and the organization’s process documentation. The most beneficial part of the exercise for me, however, was the experience of a real world formal analysis of the root causes of business issues. What I took from the exercise was a healthy respect for the importance of uncovering and then addressing root causes instead of symptoms. Much of this Organization Behavior class turned out to be focused on the application of root cause analysis, the astounding prevalence of change focused on the wrong variables, the heuristics that drive these errors in judgment and the sometimes devastating consequences of these errors. Unfortunately, attempts to heal symptoms not only neglect to fix an issue, but frequently end up exacerbating the issue and further veil the true root causes. It is on that note that I again turn to the current “health insurance” reform debate. Today, the administration rolled out the latest proposal for reform, borrowing nearly all of the substantive measures approved on a partisan basis in HR3590 but adding federal control over health insurance rates, cutting Medicare Advantage reimbursement rates further, delaying the “Cadillac Tax” that would have affected union members and others with rich benefits, and replacing that revenue with increased penalties – administered via a complex process – on businesses whose employees are provided government subsidies. Back in October, I wrote about the lack of consumerism in healthcare as the true root cause of our nation’s healthcare cost escalation issues (one of a number of primary symptoms), which in turn is a major contributing factor to many of the other secondary and tertiary symptoms we see, including the portion of the uninsured population that is involuntarily uninsured. Since that time, our government representatives seem to have moved farther away from addressing the issues that are at the heart of our “healthcare” challenges and have simply stepped up the attack on the one industry that has historically innovated to control costs. The impact of these attacks is felt everywhere in our industry. We are seeing many of our clients continue to retrench in the wake of the double blow delivered by the attacks from Washington and a major recession that has dramatically reduced their membership rolls. A government body set up to determine health insurance rates will further distort market forces that would otherwise reward innovation and efficiency, resulting in far less investment in these critical areas. Nearly every part of the current proposal focuses on symptoms and political rewards rather than root causes, and the effects on our healthcare system will be negligible at best and disastrous at worst.

MMSEA Section 111 Regulations Update

*** Update: CMS responds to industry concerns by delaying implementation date *** This posting is targeted toward claims management and claims executives overseeing liability and WC products. The April 1 CMS implementation date for NGHP (non-group health plans) Medicare Secondary Payer Mandatory Reporting associated with Section 111 of the MMSEA (Medicare Medicaid and SCHIP Extension Act) of 2007 is quickly approaching, and we are hearing all kinds of compliance pain. While a consortium of industry trade groups (NAMIC, AIA, SIIA) have sent a letter to CMS asking for reconsideration of the date, the onerous penalties, and other aspects of the program, I am not aware of any changes to the implementation schedule or parameters at this point. In the meantime, insurers and TPAs are scrambling to comply with these updated regulations. For additional information, follow this link to the CMS section on Mandatory Insurance Reporting. There you will find an overview of the process, details on the application to NGHP (P&C claims departments fall under this heading), transcripts from recent CMS “Town Hall Teleconferences” and other resources. If you want to hear more details on how our clients are tackling this issue or need further assistance, don’t hesitate to contact us.

Economically Speaking…

(a follow-up post to the 2010 Impact Survey results) Much like our actuarial friends, my comfort level is greatest with the ‘evidentiary’ or hard sciences – this is why I obtained a degree in mechanical engineering in my younger days. I am least comfortable with the softer social sciences and am certainly not by nature an economist. I do, however, consider myself a student of politics, current events and of history; and I truly enjoy hearing many sides of an issue. Like many among us, back in 2007, as Northern Rock was toppling and the credit market was beginning to seize up, my interest turned to the economy and its fundamental drivers. Thus, I have read and watched and listened to quite a bit about what we are currently going through. For the most part, this post is going to be my recommendations on where one might find some interesting (and I feel compelling) perspectives; but first I will provide an update from the front lines of the insurance industry labor market with no suggestions that our view has broad implications. Back in October, I mentioned this study by the American Staffing Association and the statistical links between GDP performance, temporary staffing growth and employment growth. Well, from the micro perspective of one mid-market firm, the links are holding up this time around again. In October, I referenced the marked increase in order activity that began in September within our three temporary staffing business units. Aside from an expected lull around the holidays, this higher level of activity continued through December and then accelerated quite a bit in January. Interestingly, January also saw a significant improvement in our executive search and professional recruiting businesses. In fact, our new search bookings reached their highest level in 18 months. So far, the script is playing out as one would expect based upon the historic patterns as evidenced in the ASA study. For other, more accomplished perspectives on the economy and where we go from here, the following are my recommendations: One of my survey participants referenced Nassim Taleb’s "The Black Swan” and suggested that Mr. Taleb would believe I had asked the wrong question – ironically this was one of the first books I tackled back in 2007. If you haven’t read it, I highly recommend it as a unique and thought-provoking perspective on the world in which we all live. Mr. Taleb also has an ongoing blog, though I understand that he is not currently posting in part due to his frustration over the recent reconfirmation of Ben Bernanke. I found Carmen Reinhart and Ken Rogoff’s “This Time is Different: Eight Centuries of Financial Folly” to be a very readable, data-driven survey of financial crises. Their approach is to lay out the data facts in clear terms with very little unsubstantiated opinion. Their follow-up into what happens after financial crises serves as a stark warning of the dangers of mistaken policy over the next several years – we cannot allow a consumer debt crisis to simply be replaced by a sovereign debt crisis. If you are looking for a more narrative overview of financial crises and their aftermaths, “Devil Take the Hindmost: A History of Financial Speculation” by Edward Chancellor was very readable and educational. Back in May of 2008, as the ‘subprime crisis’ was morphing into something much larger and uglier, NPR’s “This American Life” ran a show entitled “The Giant Pool of Money” that provided a very well-researched overview of what had happened and was happening in the subprime market. I believe this became one of the most popular episodes of an incredibly popular radio series (“TAL” is currently the most popular podcast in the country). From this episode, NPR spawned a new podcast in late 2008 called “Planet Money,” which is a non-economist look at all things economist. Some episodes are lacking; but overall this is a well-researched and worthwhile podcast and they have had some very accomplished guests. Finally, if you want to see an entertaining overview of the competing Keynesian and Austrian School viewpoints, take a look at this very funny video. I’ll finish up by saying that I have heard, read and learned many different viewpoints on where we go from here (the above is only a small sample). There are some very bearish views with very compelling stories. I am aware of these perspectives and give them their due respect; but personally I am very optimistic that this great country is on the mend and that the brightest days for our economy are in the future. Challenges lay ahead, but so does opportunity. I welcome comments and any of your recommendations.

Survey Says...

The Survey Says…

The above was said in my best Richard Dawson voice (which is not very good). Thanks for the terrific response to the survey; we ended up with a pretty good response rate – nearly 20% – which our marketing department tells me is not bad for a blog survey. I broke down the results by showing the average position for all respondents and then the average by industry. Here are the results: All HC P/C L/D Healthcare Reform 3.2 1.4 4.7 4.6 Fiscal Policies 4.7 4.8 4.7 4.5 Monetary Policies 4.9 5.4 4.5 3.8 Other Regulatory 5.3 3.8 6.5 3.1 U.S. Economic Performance 2.6 3.6 1.9 2.6 U.S. Labor Market 3.6 3.0 4.2 3.7 Catastrophes 4.6 7.0 3.0 7.5 Access to Capital 4.8 4.8 5.2 4.9 Other (specify) 5.3 6.2 1.9 N/A * On the scale used for this survey 1 stood for the most impactful. The ‘Other’ category skews the data a bit because most respondents did not include this category in the rankings and those that did all had different specific issues. I should also qualify this by saying that less than 10% of the respondents were from the life and disability industry, so the results are based upon a handful of opinions. Thoughts on the Results It is not surprising ‘U.S. Economic Performance’ was the clear winner among all respondents. I found it a bit more surprising that ‘Monetary Policy’ was rated as low across the board, as it was considering the impact of investment performance on the returns of our industry. Within the industry groups, there were no major surprises, though the anticipated impact of ‘Other (non Healthcare Reform) Regulatory Changes’ within healthcare was notably strong. Because I wasn’t very specific in my descriptions, I am not sure where we draw the line between healthcare reform and other government regulation; though I imagine that the 2011 deadline for Private Fee-For-Service plans to develop networks and the 4% anticipated reduction in Medicare Advantage reimbursement both played significant roles in the high ranking for ‘Other Regulatory.’ As one would expect, we saw a big disparity between the healthcare perspective and the property and casualty perspective, as ‘Catastrophes’ were of significantly higher concern and the labor market was considered a lower impact issue. I imagine that the current 5-6 year soft market for most lines is considered of high impact, and it was mentioned in different manners a few times in the ‘Other’ category. In the life and disability industry, we saw a higher level of consternation for ‘Monetary Policy’ decisions as expected given the fact that this is the most investment driven of the three industries. While I hesitate to read too much into this very unscientific poll, I found it intriguing that ‘Access to Capital’ was of little expected impact. Over the next few months, I will offer my take on many of these subjects and try to summarize what we are hearing in the market as we talk to clients and candidates. I will also be watching the returns in the MA Senate race with great interest this evening – the impacts on current health insurance reform could be significant. As always, I welcome your comments.

Welcome to Interesting Times in the Labor Market

The commonly-held story is that the Chinese have a set of three curses of progressively-worse consequence that predate written history: May you live in interesting times May you come to the attention of those in authority May you find what you are looking for While the attribution of these curses to any specific culture – let alone the Chinese – is of dubious nature, they each represent an interesting circumstance that, upon reflection, can be viewed as either a blessing or a curse, depending upon your perspective. That, of course, is the point. The industry (the three collective insurance industries) that we are part of is living through the first two of the above curses – I don’t think I need to explain using the curse vs. blessing label in this context. There is however a ‘blessing’ perspective: the organizations that come through this tumultuous time will emerge stronger and with less competition. Even the gaze of authority may very well end up expanding the market without (hopefully) doing lasting damage to the market. Here at The Jacobson Group, we are going through our annual budgeting and planning process; and the uncertainties we are attempting to evaluate are more complicated and more numerous than those we have seen in our past. What affects our industry and its labor market, affects us. But we, too, believe that we will emerge stronger with deeper relationships. We are already seeing a great paring of competition as one of our larger competitors has been sold and is undergoing a dramatic restructuring process. It is the last and purportedly most dramatic curse/ blessing that could prove the most impactful. There are two ways the statement can be evaluated: “May you find what you are seeking” or “May you find what you are expecting.” While I am quite sure the original intent was the first interpretation, the second flows much better with my purpose in this entry, which is to solicit industry opinion. What do you expect in 2010? More narrowly, which of the items that I have listed in the 2010 Impact Survey do you expect to have the biggest impact on the industry in 2010? I invite you to participate in this 2-question survey by clicking here. Once we have some feedback to compile, I’ll revisit the highest-rated topics, and we can delve into their values as curses or blessings.

Healthcare Reform: Untouchable Malpractice Issues and its Effects

My wife and I spent the weekend in Los Angeles and had dinner with friends we met this summer on a family trip to Israel. It was a welcome reunion because the last time we saw these friends was during a near-tragedy. After spending the day on a bus, traveling from the Dead Sea through the desert to the Red Sea resort town of Eilat, we arrived at our hotel. As we were checking in, the fourteen-year-old son of our friends collapsed. Fortunately, our group included an anesthesiologist who immediately began CPR. The young man was unresponsive until the hotel staff brought out defibrillators, which were used by the doctor to resuscitate him. During the subsequent ambulance ride and that night at the hospital, he arrested several more times. It was an extremely traumatic event that none of us will forget; however, the story has a very happy ending as the young man is now in great shape with no discernible lasting impacts from the event. Here’s the connection to our healthcare reform discussion: Our friends spent 8 days in a hospital in Beersheba, during which their son was housed in the ICU. After 7 more days in Tel Aviv, the family was able to return to their home in LA. Upon returning, the young man came under the care of a well-respected cardiologist, who – after a battery of tests – recommended an implantable defibrillator. A second opinion came to the same conclusion. The young man’s mother called the cardiologist who had overseen his care in Israel, because she had developed a deep respect for his opinion and he had maintained care of the young man in the early hours of the crisis. This cardiologist strongly urged her not to have an implanted defibrillator, as he was quite certain that the cause was a virus that had attacked the young man’s heart or pericardium (I am unsure of the specific diagnosis) – he further felt that the suggestion to implant was based upon ‘defensive medicine.’ I am not a doctor and do not pretend to know which camp was correct in this situation. I do know that I have heard quite a few of these stories, and many of them from doctors themselves. My wife and I had dinner a few months ago with a couple, both of whom practice internal medicine, who told us that a full 40% of the tests they prescribe are done out of the need to cover all the bases so that they do not open themselves up to a hungry medical malpractice attorney reviewing their decisions. Take a look at the June 2005 edition of the Journal of the American Medical Association. One insight I have garnered from speaking with doctors is that the true cost of a malpractice claim is much greater than the potential claim itself. The reputational capital cost associated with simply being sued – win or lose – is very steep, and that reputational risk may account for a large portion of the defensive decisions that are made. Saturday evening, the House of Representatives rejected an amendment to include malpractice reform in the healthcare bill they have passed to the Senate. Why? Certainly special interest groups have sponsored their own studies to show that malpractice costs are a minute contributor to the cost of healthcare, but many studies have shown that defensive practices contribute a significant amount to our nation’s annual health bill. I have seen studies showing total contribution of between 5% and 10% of total healthcare costs. Anecdotally, I have heard higher numbers. Regardless, the impact is clearly significant enough that our representatives should be pushing hard to include this issue in any healthcare reform that has a goal of impacting costs. What do you think?

GDP Growth and the Return of Employment

Wall Street is celebrating today. The strongest GDP growth in two years has the bulls battling back after a rough four days. Unfortunately, the latest from the BLS wasn’t quite as positive, as the preliminary figures show another 530,000 people filed new unemployment insurance claims last week. The better news that was found in the continuing claims data is viewed skeptically, as the source of this data is state unemployment rolls; so those who have been unemployed long enough to have exhausted all of their state benefits are no longer counted (these individuals continue to receive unemployment benefits from the federal government). Staffing firms are harbingers of the future. If you are interested in the relationship between staffing and the economy, the American Staffing Association published a landmark study back in June. Basically, the study found: A very high correlation between GDP growth and temporary staffing Temporary staffing growth to be a coincident indicator of GDP growth Temporary staffing to be a strong two quarter leading indicator of nonfarm employment growth Given the above, you will not be surprised to hear that I am often asked how we are doing. In the eight years leading up to and including 2008, The Jacobson Group’s revenues grew at a compound annual rate of 32 percent, landing us on the list of fastest-growing staffing firms for two of the past three years. Needless to say, this year has been a bit more of a challenge. That said, our temporary staffing business units all saw a marked increase in activity in September and October. Furthermore, our activity levels seem to be accelerating. I hesitate to read too much about the general economy. In our experience, the insurance industry is not representative of the entire market and our firm is only partially representative of the insurance industry. However, based upon the strength of the increase in demand, I am optimistic that we are seeing an inflection point. I also have heard recent optimism from others in the more general areas of the staffing community. Given that, if the ASA study relationships hold up, we could see a sharp uptick in employment come early 2010. No doubt, we all would smile at that news. I’ll keep you posted.

MMSEA Section 111: Reporting Requirements for Non-Group Health Plans

I’ll apologize upfront for the acronyms – they are direct from CMS. As most of you are aware, the implementation of Medicare Secondary Payer Mandatory Reporting for liability insurance (including self-insurance), no-fault insurance and workers’ compensation is well under way. The registration period for NGHP on the Coordination of Benefits Secure Website (COBSW) began on May 1st, and hopefully by now all Responsible Reporting Entities (RRE) are registered and ready to begin the Claim File Testing process on January 1st. While the first Claim Input Files are not due until the second quarter of 2010, the reporting requirements extend to claims for which ongoing responsibility for medicals (ORM) exists as of July 1, 2009. We are hearing a wide range of reactions to the upcoming reporting requirements and changes to Medicare resources. While we know that Section 111 will have some sort of impact on every GL, WC, and auto carrier and all TPAs, there seems to be little consensus as to the size and breadth of the impact. I would love to hear from you - How are you preparing your staff to handle the upcoming requirements? Will your systems support the new processes? Are you anticipating increased workload to identify ORM claimants who are or may soon be Medicare beneficiaries? How will your settlement process change?

The Right Healthcare Reform?

Early last year, as the presidential primary election campaigns heated up, we began to hear the details of the various healthcare proposals put forth by the different candidates. While they varied in approach, structure and cost, they all were focused around a few principle objectives: Slow Down Cost Growth Expand Coverage Improve Outcomes These objectives have not changed. I would like to take a minute to delve into each of these objectives, so we understand the issues that each attempts to ameliorate. 1. Slow Down Cost Growth According to the Congressional Budget Office, the average annual increase in the total cost of healthcare from 1965-2005 was 4.9% compared to average GDP growth over that same period of 2.1%. While this is clearly alarming and must be dealt with, it should also be looked at in the correct context. During that same period, the median age in this country increased from 28.1 years to 36.2 years. While current projections show that median age will continue to increase in the future, the rate of this increase is actually slowing dramatically – the census bureau expects the median age to level out around 39.0 years by 2030. This deceleration in population aging should act as cost growth inhibitor over the intermediate and long term. While this one factor will not in itself solve our current cost challenges, it is something worth keeping in mind because the problems may not be quite as daunting as they seem. 2. Expand Coverage There are two related issues that need to be solved. The first is hampered access to preventative and wellness care by the uninsured population. The second is financial ruin that uninsured and underinsured families face when an unexpected healthcare emergency arises. 3. Improve Outcomes The shortcomings of our system have been well-documented. I am not going to rehash them all here but clearly, when it comes to the metrics that all of us would agree are important, our system has room for improvement. Root Cause So what are the causes of these issues that we face? We have heard many ideas from many players and most of these ideas have merit. I argue, however, that many of these ‘causes’ are not causes, but rather symptoms of the problem. For instance, the ARRA included $19B for investments in health information technology, aimed exclusively at healthcare providers. The idea behind this subsidy was that the provider industry needed a kick-start to invest in technology – and that investment would lead to efficiency gains. Why is it that this huge industry needs government money to invest in technology where every other industry does so via reinvestment of revenue? I postulate that healthcare providers are rational economic players and, generally, will make decisions that are economically correct for their own interests. The reason that information technology dominates every other industry is economic Darwinism – only the strongest (most efficient) organizations survive and information technology is a key to efficiency. Quite simply, there is no economic competition for the consumer among healthcare providers and this structure provides a lack of economic incentives. The symptoms of this problem are seen everywhere in our healthcare system: in the 60-minute waiting room delays for a ‘scheduled’ appointment, in the uncoordinated approach to care among providers focused on the same patient, in the ridiculously high ‘retail price’ of hospital stays, and mostly in the runaway cost of care. If we solve the problem of missing consumerism, we make a huge impact on the cost of care and, if done right, we also make great strides towards improved care. Expanded coverage will follow. I am not suggesting that consumerism alone will bring us all the way to the ideal. There are no doubt other issues that need to be solved, including the tort system and the impacts it has on defensive medicine. However, consumerism is the best tool we have to get most of the way there. The Wrong Focus Somehow the health insurance industry has become the focus of upcoming changes. This is ironic given the fact that our industry has been one of the very few inhibitors of cost growth over the past twenty years. Attempting to solve the healthcare issues by reforming insurers is akin to creating Wal-Mart reform because the cost of food has gone up. It is counterproductive. Solution The only way to solve our healthcare challenges is to attack the problem by injecting consumerism into the process. Interestingly, with the help of the government, our industry has made great strides over the past several years. The latest generation of Consumer Directed Health Plans, greatly strengthened by the 2004 creation of Health Savings Accounts, is just now getting consumers comfortable with taking some control of the economic decisions involved in healthcare. Moreover, these plans are economically encouraging Americans to make better lifestyle decisions that will have a dramatic positive effect on our healthcare system. What is missing from the current solution set is significant. There is a massive knowledge gap between providers and consumers that makes consumerism extremely difficult. This is where government can step in and add value to the process. By defining standards for outcomes, measures of efficiency and even customer satisfaction, and by then measuring providers against those standards, the government could provide the keystone to a consumer-driven healthcare system.