North Bay brokers form 'task force' to lower health insurance costs

NORTH BAY -- A group of top health insurance brokers in the North Bay are putting aside their competitive natures to form a nonprofit organization that they say will focus exclusively on lowering health insurance costs for mid-sized employers in the region.

Brokers from some -- though not all -- of the North Bay's most influential insurance agencies are creating the Task Force on Lowering Health Insurance Costs, modeled on a similar effort for Fortune 500 companies that doesn't exist for the mid-sized employers throughout the state.

"The purpose is to create a nonprofit entity to help employers reduce their health care costs," said Keith McNeil, a broker with The SSM Group in Novato who was instrumental in forming the Task Force.

From fewer carriers to a return to managed care under the Affordable Care Act, much has changed in both the delivery of health care and health insurance over the past 25 years. But little has changed in how brokers and employers negotiate with health plans and providers, brokers said. 

"Other than (health savings accounts), it's pretty much the same," Mr. McNeil said, referring to consumer-driven plans that employers have increasingly relied upon to keep costs down. "It hasn't changed a lot."

Instead of seeking solutions with one employer at a time, Mr. McNeil and other brokers said that by joining forces via a nonprofit, mid-sized employers could potentially benefit from sharing best practices, advocating as a group with health plans and potentially even combine purchasing power.

And now more than ever, with the looming implementation of the ObamaCare, smaller and mid-sized employers especially need a unified voice and an outlet to search for solutions, brokers said.

"Rather than wait for the state or the feds, this can be a local effort," said Bud Martin, of Wells Fargo Insurance Services in Petaluma. 

Although the Obama Administration recently delayed so-called "pay-to-play," the mandate requiring employers with 50 or more workers to provide health insurance or face a penalty, Mr. Martin said employers, brokers and health plans alike should seek common solutions in bending the cost curve on health insurance costs.

"We can't assume health care reform will do everything," Mr. Martin said.

The Task Force is inspired, in part, by the Pacific Business Group on Health, a nonprofit group based in San Francisco that similarly seeks to help larger employers find solutions on lowering health costs.  

"We're saying 'What is out there in California below that market place?'" Mr. McNeil said.

Brokers involved in the project are: Mr. McNeil and Jordan Shields of the SSM Group, which is a division of United Benefits Advisors, a national brokerage; Victor McKnight of EPIC Insurance Brokers in Petaluma; John Fradelizio and Mr.  Martin of Wells Fargo Insurance Services in Petaluma; John Zervakos of Willis Insurance Services of California in San Francisco; and Jim Settles and Chris Reiter of Wooduff-Sawyer & Co. in Novato.

Collectively, the involved brokerages hold roughly $475 million in North Bay premium volumes, or nearly half of the approximately $935.6 million in all North Bay premium volumes among the top 20 employee benefits agencies, according to the Business Journal's Book of Lists.

The "Preferred Broker Partners" were selected because the agencies have either a national or statewide presence, and the goal is to eventually expand the Task Force elsewhere in California, brokers said. They stressed that locally based brokerages, such as Vantreo or George Petersen, were not excluded but that they do not have the statewide presence to help facilitate expansion. Brokers from other agencies may be invited to share their ideas, they said, and any product developed would be available to all brokerages.

Eligible employers are those with 100 or more employees in Marin, Sonoma, Napa and southern Solano counties.

The fundamental purpose is to create "an ongoing dialogue between large employers in the North Bay and the premier medical groups in the North Bay, with the goal of bringing collaboration between both sides to lower employer health care costs."

The Task Force is not a new insurance broker or health plan, nor is it a think tank or political action committee. It is set up as a 501(c)6 nonprofit corporation. The Task Force will be a coalition of employers "designed to negotiation collectively (or individually)" with health plans, medical providers and perhaps other lines of insurance.

However, the Task Force said it does not intend to use its clout "to force health plans, vendors, or insurance carriers to make requested changes by threatening them with a boycott or other hard-sell approaches." Instead, brokers said they are looking for a "win-win" situation that sees costs reduce for all parties involved.

Brokers also said the meetings with employers will be "solicitation-free zones," wherein preferred brokers will be instructed to not approach member firms "about possible brokerage or consulting services."

The brokers also stressed that the Task Force should not be construed as a merger, saying all organizations would remain independent and would still compete with each other outside of the Task Force.

"It exists solely for the benefit of the membership, not to promote the brokers," Mr. McNeil said.

Based on conservative estimates, brokers said employer-sponsored health costs are increasing by 8 percent annually. Ideally, the Task Force would like to bend that figure to 2.5 percent.

"It's an unsustainable cost curve," Mr. McKnight said.

Micah Weinberg, a senior policy advisor at Bay Area Council who focuses on health care and health insurance, said the North Bay Task Force effort is unique, particularly because it attempts to alleviate pressures on the mid-size employer market.

"The thing that I find compelling about this project is that it's really focused on mid-market companies," Mr. Weinberg said. "A lot of the more innovative things being done are by large companies and large public entities like CALPERS."

Similarly, smaller and mid-sized employers may or may not face a different set of challenges than, say, an employer with thousands of workers, Mr. Weinberg said, adding that groups like the Pacific Business Group on Health have been successful in several instances.

"I think that is has (been successful)," Mr. Weinberg said. "The question then becomes: can these mid-market companies just adopt the same strategies, or do they need a series of strategies tailored to their own needs?"

Mr. McKnight, of EPIC, offered similar thoughts, noting that he is increasingly hearing inquirers related to self-insurance for employers. Through the Task Force, such a topic could be broached by a larger group of employers.

Other potential topics could include employers sharing thoughts on wellness programs, using so-called "skinny" or "narrow" networks of providers to even setting up onsite medical clinics or encouraging medical tourism, Mr. McNeil said.

"We need to start with employer engagement," he said. "Employers cede everything to the health plan. Maybe employers actually have power."

The Task Force intends on holding two initial meetings for employers, one at Embassy Suites in San Rafael and the other at the Hyatt Vineyard Creek in Santa Rosa, in mid-September.

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