Health care reform dangles over employers and their employee benefits agents and brokers like a sword of Damocles. Everyone knows it will drop in 2014, but no one really knows exactly what changes it will bring to the group benefits process and the important relationship between employers and their trusted advisors.

Assessing the potential impact on clients and then bridging the gap between 2010 and 2014 is a critical challenge for agents and brokers, says Rick DeBartolo, senior vice president and employee benefits department director at LaMair Mulock Condon Co. in West Des Moines, Iowa.

The agency partners with Milliman, a national employee benefits and actuarial firm, for benchmarking data and will soon use a model that the consulting company has developed to analyze the impact of health reform on individual employers. “The Employer Impact Report” will give clients a better picture of how the new law and the developing rules will affect their costs, plan design and their access to health plans, says DeBartolo.

However, analyzing the relationship between the agency and clients may be another matter, DeBartolo points out. “No one can be certain at this stage how health reform rules will change the way we serve and interact with our clients, but I think we can expect that the biggest changes will come in the small group market.

“With the elimination of pre-existing conditions exclusions, restrictions in underwriting and the introduction of insurance exchanges, we know that small employers and individuals are the ones most likely to feel the change,” he says. “We could easily find ourselves shopping the individual health insurance markets for employees as they discover more opportunities there.”

LaMair Mulock Condon has a long history in the region that is dominated by small to medium-sized employers. The predecessor agency was founded in 1865 in Des Moines by E.J. Ingersol as an extension of the Hawkeye Insurance Company. Fifteen name changes and 14 office locations later, the agency settled in West Des Moines in 2003.

Employee benefits has long been a part of the agency’s business and has been growing steadily since the turn of the 21st century, notes DeBartolo. Employee benefits and financial services is now approaching 40% of revenues. DeBartolo foresees employee benefits reaching as high as 50% of revenues, providing a perfect balance to property/casualty insurance and risk management operations.

DeBartolo joined the agency in 1989 and became head of the employee benefits operations in 2005, directing an era of rapid growth in revenue and sophistication of employee benefits services.

“The value we bring to clients in the market has grown and changed dramatically in the last five years. We have become more of a consultant than an insurance marketer. Service and expertise have become important components of what we do as we work with our clients in designing more sophisticated benefits programs, more effective cost sharing and better communication of benefits.”

In the last two years, the agency’s total revenues have increased by about 7% per year, but employee benefits revenues have increased about 25% a year, a testimony to the rising health plan premiums—increasing faster than property/casualty insurance rates and premiums—but also to the productivity of the employee benefits division, DeBartolo says.

The agency has about 140 employees, including 30 in employee benefits services. Clients range in size from fewer than 10 employees to more than 6,000 employees, but the agency’s average employee benefits customer has about 50 employees.

Cost concerns affect clients of all sizes, though the smaller firms have been facing the biggest rate increases, he says. The small group health care cost hikes have ranged from 12% to 15% (annual increases).

Larger employers with 100 or more employees have experienced trends of about 9%, controlled somewhat by broader options in plan design and self-funding. Firms of 125 employees or more tend to self-fund a portion of their employee benefits costs, making them more able to influence costs with consumer-directed health plan designs and health management services, DeBartolo says.

Fred Bounds, senior vice president and producer for hospital industry business, oversees a wide range of risk management and employee benefits services for one of the agency’s most important niches. He also provides an insider’s insight into the impact of health care reform.

“Our biggest challenge for our hospital clients and many of our other employers is creating an employee benefits strategy that will bring them through to 2014,” Bounds says.

Costs remain the biggest issue, and Bounds says the health care industry, and hospitals in particular, are taking the lead in attempting to steer patients to the most efficient health care utilization. In many cases, that means steering local patients to the hospitals themselves and their own cost-effective treatment programs.

Bounds is also involved in developing “value-based benefits” programs that “lower the barrier to treatment and lower the costs of proven treatments” for chronic disease such as diabetes. In the long run, he says, these programs are most likely to lower treatment costs and reduce acute and expensive medical episodes.

Renee Blakely, employee benefits department manager, supervises 12 account specialists who provide the day-to-day contact and support for human resource and employee benefit managers as well as acting as a liaison between the employers and the agency producers who continue to maintain relationships with the companies.

The department also provides employee benefits communications and employee education in benefits, administrative services, including consolidated benefits billing from insurers, technology access through Zywave Web portal products and regulatory and compliance support.

“One of our most important functions is staying current on the rules and regulations of health reform as they evolve,” she explains. “Employers are very interested in how the law and its rules will affect them and what they will need to know to comply. They look to us for that insight.”

The department also maintains relations with the region’s leading health plans and coordinates the delivery of services provided by the insurers as part of their contracts. Leading health plans in the area include Wellmark/BlueCrossBlueShield, United Healthcare, Principal Financial and Coventry Healthcare.

Health management services have become a huge component of the agency’s employee benefits services and a key differentiator, agency executives say. And regardless of changes brought by health reform, the agency’s commitment to wellness strategies is unlikely to change.

In August 2010, the agency received the Gold Well Workplace Award from the Wellness Council of America in Omaha, Nebraska. The award recognizes quality and excellence in worksite health promotion and designates winners as one of America’s Healthiest Companies.

The Gold level is the second highest award, acknowledging organizations that have developed comprehensive programs producing results. These programs must be a strategic and integral part of the business, according to the organization.

Susie Roberts, health management services account executive, is the agency leader in all wellness matters. A former employee benefits manager at a regional transportation company, Roberts designed her first wellness and health management program in the 1990s, addressing the pattern of rising health costs at her company. The project coincided with her pursuit of a Master of Science in Business Management from Iowa State University.

Roberts joined LaMair Mulock Condon in 2007, bringing her enthusiasm for wellness and healthful living and expertise in products, services and programs that encourage wellness in the workplace.

The agency now provides a broad range of services and no-cost consulting to its clients on designing wellness and health management programs. Employer programs can range from health education handouts and “lunch and learn” seminars to companywide health screening programs, health coaching and disease management with follow-up metrics to assess success.

Employer interest in wellness and its potential for reducing costs and improving productivity continues to increase, Roberts says, but commitment still varies. “The most common question we are asked is, ‘How do we begin?’”

Roberts explains that initiating a comprehensive wellness strategy requires serious employer commitment.

“When we talk to an employer about developing a wellness program, we ask three questions,” she says. “Is senior management committed? Will management appoint a point person for wellness and give that person time to work on wellness tasks? Does the company have a wellness budget?”

Roberts says she recommends that employers budget 2% to 6% of health care expenses for wellness initiatives. It may seem like a lot, but she says the results of wellness programs in progress have been extraordinary, with large portions of employees improving their health status and productivity.

Regardless of which way the reform blade slices, DeBartolo foresees a continuing role for his agency and a continued growth in health-related services. Health claims management and consulting will continue to be a growth area and the agency will play an important role in advocating for its employers and individual employees.

The agency already provides a range of ancillary benefits for employers, including accidental death and dismemberment insurance, short- and long-term disability insurance, dental and vision plans and employee assistance programs.

The agency also has a partnership with Health Advocate in Plymouth Meeting, Pennsylvania, to provide employer-paid patient advocacy services for employees participating in group health plans.

“These kinds of special services are very important to employees and are likely to be even more important as the health care rules change in the future,” DeBartolo says.