CAHU Event Focuses on Sales
Sell by Design, Not by Chance was the theme of The CAHU Sales Conference in October in Burbank. Bryan Flanagan of the Flanagan Training Group described his sales approach as selling value, not defending price. He outlined the following keys to success:
• P – Prospect, plan, prepare
• R – Relate and build trust
• O– Open a dialogue
• C – Confirm client’s needs
• E – Explain the solution
• S – Sell the value
• S – Simply close the sale
Mark Reynolds, CEO and president of California based BEN-E-LECT covered some of biggest factors driving healthcare costs. Reynolds said that the consumer is the number one driver in increased healthcare costs. One factor is simply that the population is getting older. The number of Americans over 65 years is expected to nearly double by 2030, according to a report published by John W. Rowe, MD in 2008.

Another major factor is lifestyle -- Nearly one-third of Americans are clinically obese with a body mass index (BMI) of 30% or more. The number of obese Americans is an alarming 31% of the population. More than 63% of Americans are considered to be overweight with a BMI in excess of 25%.

The National Center for Health statistics has been tracking America’s obesity. The U.S. Surgeon General recently released a report showing obesity as the cause for more than 300,000 deaths every year. Obesity leads to a legion of ills, from heart attacks and strokes, to gut cancer and diabetes. A number that is sure to grow is the annual cost for treating diabetes. Today, this number alone exceeds $200 billion. It doesn’t end there. Childhood obesity has more than tripled in the past two decades in the United States.

Another factor in rising healthcare costs is lack of exercise. Many experts agree that lack of physical activity contributes to more than 300,000 deaths each year in the U.S. caused by heart disease, stroke, diabetes and other conditions.

The fourth factor is smoking. The CDC reported that 43.4 million U.S. adults were current smokers in 2007. This is 19.8% of all adults. A 1982 Surgeon General’s report stated that “Cigarette smoking is the major single cause of cancer mortality (death) in the United States.” This statement is as true today as it was in 1982. Smoking cigarettes kills more Americans than alcohol, car accidents, suicide, AIDS, homicide, and illegal drugs combined. Staggering isn’t it? Unfortunately for this topic, the death related to smoking isn’t the issue. It is the cost of the healthcare leading up to that death.

“Do you ever wonder what would happen to the cost of healthcare if we just stopped smoking and started exercising? Those two simple steps alone would be a driving force in lowering the cost of our healthcare,” he said.

The fifth factor is defensive medicine. When it comes to defensive medicine, the issue is not malpractice awards, which drive up healthcare costs by 1% to 3% annually. That’s not a lot in the big picture. The real issue is the doctor’s reaction to a perceived threat of a career-ending malpractice award – to practice defensive medicine. One study by the University of Connecticut revealed that Massachusetts alone wasted $1.4 billion on defensive medicine in one year. More than 900 physicians in Massachusetts were asked about their use of seven tests and procedures: plain film X-rays, CT scans, magnetic resonance imaging, ultrasounds, laboratory testing, specialty referrals and consultations, and hospital admissions. Eighty-three percent of these 900 physicians reported practicing defensive medicine. The fear of being sued is driving physicians to defensive medicine and is dramatically increasing our healthcare costs, he noted.
Politicians can be blamed for the sixth factor in rising healthcare costs. There are nearly 1,500 mandated benefits in the United States and each mandated benefit adds a little extra to the cost of healthcare.

The Norvax and CAHU Conferences, plus the Warner Pacific Sales Expo

by Leila Morris
Numerous conferences and events, throughout Southern California, have kept the staff of California Broker Magazine hopping over the past couple of months. This month, we feature coverage of a sales-focused CAHU Show, A Norvax University Sales Event, and the Warner Sales Expo., featuring John Nelson, co-CEO of Warner Pacific interviewing former Democratic Senate leader Tom Daschle on what to expect with health reform. Look for the next issue for coverage of conferences on medical tourism, limited benefit plans, and wellness plans.

Norvax University Sales and Marketing Conference
Norvax University Advanced Sales and Marketing Conference in September in Woodland Hills focused on helping agents take advantage of technology to grow their business. Jeremiah Desmarais, vice president of marketing for Norvax described a new landscape for selling health insurance online.

Agents who use the internet to marketing their products will reach a broader client base and expand their business, but because most clients value their relatioship with their agent, the internet should not threaten jobs, given the many individuals still prefer discussing their policies directly with agents rather than through a computer. To bridge the sales gap, agents need to get an online presence and get automated. He encouraged attendees to join the professional network site, Linkedin. Why join Linkedin? Your customers are there, your prospects are there and the connectors are there.

He encouraged agents to think about whether their websites represent them well. Even something as simple as having an unflattering photo on your website can be a real detriment to sales. He cautioned agents against including recommendations or testimonials on their websites or brochures since FINRA regulations prohibit it. He also discussed how much more productive an agency can be with automated quoting and enrollment.
He said to have reasonable expectations about leads with a 3% to 5% closing ratio in the first six months. Also, it takes an average of nine contacts with the client before a sale is closed; allow 70 days to close a lead. He said agents should demand the following from a lead company:
• Leads must be actively searching.
• Interest must be in real time.
• They don’t oversell your leads.
• They make tracking ROI easy.
• They don’t make you eat the cost of bad leads.
• They let you filter your leads.
• They can show you where the leads come from.
He also stressed the advantages of keeping up with prospects and clients through automated e-mails. When it comes to promoting your website, he suggests putting your web address out there with e-mail taglines, signs or stickers on your car, t-shirts and tradeshow presense.
Rey Villar stressed the importance of marketing through social media, by using the RSS reader, participating in forums, joining Facebook and Linkedin, having a blog, being on Youtube, and having a presense in Squidoo, Meetup, Twitter, and Yahoo! Some good consumer forums are medhelp.org, ehealthforum.com, forum.freeadvice.com/insurance-76. Some professional forums are insurance-forums.net, and American Insurance Broker.com.

Senator Dashle Gives Warner Fest An   Insiders Look at Health Reform
The Reagan Library, which overlooks the picturesque Santa Susana Mountains in Simi Valley, was the site of the WarnerFest meeting last month. Warner Pacific Co-CEO, John Nelson and former Senate Majority leader Tom Daschle, one of the longest serving Democratic Leaders in history, had an hour-and-a-half long conversation about healthcare reform. Senator Daschle is a foremost authority on healthcare reform and is the author of the book, Critical: What We Can Do About the Health-Care Crisis. He is an unofficial policy advisor to the White House and co-creator of the Bipartisan Policy Center. (The following questions and their answers are not verbatim, but reflect the essence of the subjects discussed.)

Nelson: How often do you talk to President Obama and leaders of congress?
Daschle: The President – several times a month. Congressional leaders – almost every day.
Nelson: Of the 300 million Americans, 253 million have coverage and are pretty happy with it. Of the 47 million Americans who don’t have coverage, about one third of them already have access to coverage through a variety of public programs but for one reason or another aren’t signed up; another third are healthy and can afford the coverage, but choose not to buy it, leaving about 10 to 12 million Americans who want the coverage but can’t get it. In other words, 19 out of 20 Americans have coverage or access to it. So why not just spend a nominal amount of money and get the one out of 20 people insured?
Daschle: Medical costs are out pacing regular inflation by about a 3:1 ratio. It is also clear that we’re not getting what we’re paying for. Healthcare outcomes for citizens of other countries are better than the United States. Yet, our per capita expenditure for healthcare is, by far, the highest of any other nation. This is unsustainable and something must be done. Democrats believe they were elected to resolve this and that’s what they’re trying to do.
Nelson: What went wrong with the attempt to reform healthcare during the Clinton Administration?
Daschle: By the time the Clinton healthcare bill was finally introduced, the aura that a new administration typically enjoys was long gone, worn down by other major legislation and administration actions. The newer an administration is, the easier it is to move legislation forward, especially if one party controls both houses in congress and is represented in the White House. When the Clinton administration did submit a bill, it was over 1400 pages long that had zero input/buy-in from Congress during the bill’s development. Additionally, there was no hearing or bill markup for six months which made it even more vulnerable. The delay gave a lot of people a chance to pick the bill apart. Eventually, the majority decided that the status quo was better and the bill fell apart under its own weight.
Nelson: In your book Critical, which was published in 2008 (before the elections), you said that the key to passing reform (assuming that a democrat is elected president and that democrats control congress) is not to allow any major legislation to stand between the inauguration and healthcare reform, keep the bill simple (limit it to about 400 to 500 pages long), avoid at all cost any descriptions of benefits within the bill and, finally, that the president should sign the bill that he gets. The reality is that Congress had the stimulus bill, the House passed Cap and Trade, the Senate had the Sotomayor nomination, the August recess came and went and now there is a pending decision over Afghanistan. Also, there are multiple bills – one of which is almost two thousand pages in length.  So how do you think things are going for healthcare reform this time around?
Daschle:  That would’ve been the ideal,  but reforming healthcare is hard to do. It’s a $2.6 trillion a year business accounting for one sixth of the nation’s economy and effects almost every single stakeholder in our country, not to mention every single American. So everyone is coming at lawmakers to do it this way or do it that way. That’s why the prospect of healthcare reform happening is 60/40 and if it does get done, it probably won’t be signed into law until January or February.
[Editor’s note: Nelson noted that Sen. Daschle has adjusted the odds at each Warner Fest presentation he’s done across the state. Since Daschle’s comments, CNN has reported that the second-highest ranking Democrat in the Senate, Illinois' Dick Durbin, expects Congress to miss President Obama's end of the year deadline to enact healthcare reform.]
Nelson: What is the rationale for having a public option? How can an entity that prints money, makes the rules, and is the referee be deemed a fair competitor?
Daschle: We need more competition in some markets. In my home state of South Dakota, one carrier has about a 70% market share. In Alabama, over 90% of the market is dominated by one carrier. The idea of a public option is very compelling to many because they believe that it would add competition to these and other markets and, thus, help drive down costs.
Nelson: How likely is it for a government option to pass?
Daschle: It’s not likely to be included in the final legislation in its present form but it may pass in the form of a trigger.
[Editor’s note: The "trigger" would define a broad set of insurability and cost goals that, if not met within a certain period, would automatically trigger a government option.]
Nelson: When would most of the provisions of a bill, if it passes, take effect?
Daschle: 2013
Nelson: Both the House and Senate bills have clauses that would eliminate pre-existing condition requirements, underwriting and impose rating and other restrictions on insurance carriers for individual coverage. On the other hand, both bills provide subsidies to purchase individual coverage for those who cannot afford it and a mandate to purchase coverage for those who can. The Senate bill’s penalties for not buying coverage appear to be light. Industry leaders fear that this could lead to an adverse selection scenario and, thus, higher costs. Why buy coverage when you’re healthy when all you need to do is pay a nominal fine and get coverage when you need it? Couldn’t we end up with the same problem that Washington State had in which the individual market dried up after they passed a similar bill?
Daschle: I agree with you and believe that the penalties for not buying coverage will end up being much higher than those currently spelled out in the senate bill. Everyone must be covered by insurance. The status quo is unacceptable because those of us who are covered are paying for those who are not. Instead of visiting a primary care physician, the reality is that many of those who are uninsured seek their health care via hospital emergency rooms – a very expensive way to see a professional for a cold. These facilities, in turn, charge more to those who have coverage to make up for the uncompensated care they give to these folks.
Nelson: Administration officials and members of Congress have had harsh words for the insurance industry.  How seriously is the insurance industry being taken in the healthcare reform debate?
Daschle: In spite of what the news reports say, health insurers definitely have a seat at the table in Washington. In fact, I commend the leadership of Kaiser, United Healthcare, Aetna, and the National Association of Health Underwriters. They are credible and their input is being taking constructively by many lawmakers.
Nelson: It appears that neither of these bills do much to bend to cost curve. What about the fact that the bill would not affect major healthcare costs drivers? For example, a lot of money is going into the acute phase of care. New hospitals are costing almost a billion dollars each to build. Five chronic diseases eat up 70% of this country’s healthcare expenditures. Diabetes accounts for 35% of Medicare expenditures. And yet, neither of these bills appears to tackle these cost drivers.
Daschle: This round of healthcare reform is not a "be all, end all." But, among other things, it does help us reduce the number of uninsured and proceed down the road towards payment reform and the idea of rewarding providers for outcomes and cures. These days, there isn’t a lot of money for primary care but there’s a whole lot of money in acute care. It’s like an inverted pyramid. This bill could help improve our healthcare system by righting the “pyramid.”
Nelson: Will health savings accounts survive healthcare reform?
Daschle: Yes, they are an important part of the healthcare system.
Nelson: What is the future for health insurance agents?
Daschle: Congress understands the value of the agent and there is language that supports the role of the agent in both the House and Senate bills. The future is very bright for agents and we will need them more than ever!