Getting Real About Business with Mark Puppe
By Mark Puppe
Photo by Hillary Ehlen
Two behemoth industries, healthcare and insurance, are tangled. Add government to the mix and we’ve got a perpetual and expensive mess, but one for which we’re woefully grateful when invoiced for medical expenses.
According to the New York Times, approximately 155 million working-age Americans received their health insurance from an employer during 2018. These 155 million “working-age” Americans equates to 200-times the entire North Dakota populous.
The May 2, 2019, Los Angeles Times reports, “six in 10 Americans with job-based coverage now call affordability the most important feature of a health plan…”
Consider that relative to your own financial—not medical—health. How does the largest employer group in the nation, government, finance employee benefits? The taxes we pay. Then, how do private sector employers finance employee benefits? Bingo. The revenue generated by purchases we make with our own money. Everyone pays twice.
It’s no panacea, but many business owners turn to group benefit consultants for help navigating the health insurance mess. These specialists help employers design, strategize and monitor benefit plans so their employees have the highest quality and most affordable options possible.
However, when questions arise, employers often need to call a corporate 1-800 number to talk with an unempowered customer service representative who eventually tells them to dangle until an agent calls back.
Experiences like this are commonplace and explain why customers favor working with a small business: They feel understood and befriended rather than counted. Problem is, the more complex the trade, the more difficult smaller businesses are to find.
Independent benefits consultants don’t market, so we don’t hear about them and their success comes from referrals rather than requests. They also work most closely with the employers offering benefits.
Middaugh Benefits Consulting (MBC) has been evaluating employee benefits for nearly 40 years. Today, this little firm in Fargo advises 200 businesses about the health insurance plans available to more than 10,000 employees. This book of business places MBC among the top benefits consulting firms in North Dakota and is rivaled only by billion-dollar corporations headquartered elsewhere.
MBC partner Jason Middaugh has been with the firm since 1997. I never asked why he made unscrambling health insurance his career—that’s his decision. I also refuse to be biographical with someone whom employers trust to manage their second highest expense—health insurance.
Accordingly, I approached Jason to come clean. It seemed to me like benefits consultants are paid to dabble in challenges that employers have a chance to conquer on their own. Our discussion changed my perspective.
Mark Puppe (MP): Jason, no employer wants to pay for duplicate services and, as you know, insurance companies manage health insurance concerns. Seriously, where’s the need for benefits consultants?
Jason Middaugh (JM): All employers need the employee benefits plans they buy to be the most competitive in the market. Employees need to be confident that those benefits are great benefits. They pay good money for them and we ensure that they get the highest value possible.
Plus, managing employee benefits comes with a host of legal concerns to consider and many impose serious penalties for noncompliance.
Many of the rules and regulations governing employee benefits are complex and impose mandatory notices and deadlines, which can be difficult to follow and administer. We provide clients with up-to-date compliance information, benefits enrollment materials, employee communications and a lot more. We spare employers a lot of liability and potential cost.
MP: How can a consultant bolster an employer’s confidence in benefits that employees may never use, especially health insurance?
JM: We check the market to make sure employers are with the best insurance company available. We help clients select the right plan design based on their budget. We work with the current insurance company on designing ways to be proactive; to encourage employees to visit their physicians for preventive benefits. Our clients and their employees recognize how being proactive prevents the potentially unbearable costs and consequences of being passive.
We conduct employee education meetings to help the employees better understand the benefits they have and assist with the creation and implementation of wellness plans.
For large employers, their claims directly affect how much benefits cost and we help educate employees on how to better utilize their benefits. That lowers their claims and rate-increases.
We also help answer questions and provide solutions for HR and employee concerns. We have the best staff in the industry because they understand the industry and know how to help resolve issues with insurance companies and handle HR concerns as well. They’re not just answering the phone.
MP: Fair enough, but insurance companies offer those services directly. What do employers lose when they work with their insurance company?
JM: Working with a consultant is often far more cost-effective for employers because benefits consultants have access to important information that an employer may not have or know about.
If employers forgo consulting and work directly with an insurance company, they don’t have someone checking the market to make sure that insurance company is competitive. More importantly, employers don’t have someone looking out for their best interests.
MP: Many financial firms, like insurance agencies and banks, have merged or been sold to large corporations. How does MBC, a firm of only nine employees, withstand this trend?
JM: It’s amazing, the amount of consolidation in our business. I’ve been doing this over 20 years and never seen such a shift.
Bigger businesses do approach us, but if we seriously considered merging, it must benefit our clients, our staff and our best interests. We’ve had offers that would benefit (MBC co-partner Dave Middaugh) and me, but that is not enough. Changing must benefit our clients and staff as well.
MP: But why would clients remain loyal to MBC when corporate consultants are available?
JM: There are many very good consultants in our area and Minneapolis-based consultants serving clients in North Dakota. What distinguishes us from many others is our staff and our clients. I’m obviously biased, but I believe we have the best staff in the market. We have an HR specialist who assists with any HR-related questions and is (Society of Human Resource Management) credited. Our service rep has been in the industry for 30 years and understands insurance-relations better than others because she worked at an insurance company. Our other staff have 115 total years of benefits experience and our clients appreciate that.
Our clients are loyal, some predate me and I’ve been at MBC over 20 years. We do very little advertising because most of our new clients are referred by existing clients. That retention and the professional endorsements received reflect our own loyalty to clients.
MP: Many employers blame Obamacare for the escalating cost of health insurance, but what within the law frustrates employers and how has it impacted benefits consultants?
JM: Obamacare, or the Affordable Care Act, has positive and negative effects. A positive is how it did away with pre-existing conditions and the lifetime maximum.
Health insurance doesn’t mean much to people until they need it and when you need it, you want it to work for you. Having a million-dollar lifetime maximum seems like a lot of money, but a million dollars doesn’t go very far in today’s medical care industry. You don’t want to be in a situation where your insurance stops paying because you have reached a lifetime maximum.
Unfortunately, Obamacare has not reduced costs at all. In fact, it’s increased costs indirectly by requiring businesses to hire staff just to comply with the law.
Directly, it increases costs for customers by adding mandates to insurance companies. Healthcare and insurance are very complex issues, but the Affordable Care Act only addresses one aspect of healthcare’s out-of-control costs and that’s the insurance companies. Make no mistake, insurance companies are not blameless, but you also have the medical industry, the pharmaceutical industry and government itself driving costs. Obamacare doesn’t really address them.
For MBC, we anticipated and adjusted to the changes and our clients are grateful for it. We’re not a huge company, but we never take our focus off our clients. They recognize that we understand their needs despite the complexities and continue representing their interests, not our own.
Middaugh Benefits Consulting
1019 5th Ave. S, Fargo