Q&A with Ethan Dellhime: Growth of Consumer-Directed Healthcare

The opportunity for account-based benefit programs is large and growing both in traditional consumer directed healthcare (CDH) accounts – such as FSAs, HSAs and HRAs – and beyond. In fact, the current market size for core CDH accounts is north of $5 billion and estimated to grow to $7.5 billion by the end of 2026. And within the core CDH portfolio, growth projections by account type are significant – with HSAs and HRAs both expected to grow more than 8%, and lifestyle and commuter expected to grow by close to 11% and 12% annually through 2026.

We recently conducted a webinar with guest speaker Ethan Dellhime, senior vice president at Lockton Companies, the world’s largest independent insurance brokerage firm. Ethan discussed the market opportunity and how account administrators can capitalize on this growth. Following are some excerpts from our discussion.

Ethan, as administrators think about growing their account-based offerings, obviously their relationships with brokers and consultants are critical. Can you provide some insights into “Dos and Don’ts” when it comes to engaging with the likes of Lockton and other brokerage firms?

It’s really a partnership across the board – not just between administrators and brokers, but inclusive of solution partners and employers. The broker landscape is very competitive and it’s important for administrators to understand how brokers – and by extension, our clients – like to be communicated with, and that’s directly and openly. When it comes to communication, administrators should shift away from transactional interactions to consultative engagement that is solution-based and strategic. It’s also important for administrators to understand that not all brokers are alike; in fact, while we all want to be a part of strategic conversations, many brokers are quite different from each other in terms of who they work with, the unique value proposition, and how they engage with their customers.  It’s important to take the time to get to know your broker partners to determine the best way to elevate and expand those relationships.

How should administrators identify opportunities within the groups they serve, in partnership with brokers, especially considering that employers are grappling with a number of pressing challenges – including rising healthcare costs, the war for talent, and the current economic environment?

Change is constant, and the landscape has dramatically shifted in terms of how employers are prioritizing their strategic initiatives within the employee benefits realm. It’s not just about transactional renewals; it’s about looking at the impact that strategies have on an employer’s broader business objectives. We’re seeing much more complexity and a leveraging of technology to drive efficiencies, while enhancing both employer and employee experiences. Change and complexity offer administrators the opportunity to be consultative.

What insights do brokers and employers value from their administrator partners? How can account administrators bring more value to their broker and employer relationships, in order to strengthen the relationship?

Administrators first need to understand what the broker and employer are trying to address and solve. And they need to demonstrate this understanding through offering insights, and ideally, through benchmarking performance. If an administrator can solve a big problem, we as brokers will prioritize that particular administrator and put them at the top of the recommended list.

What are the biggest changes to benefit and workforce strategies that you see due to current labor market?

This is a hyper-competitive talent landscape and we’ve seen a lot of compensation compression as a result. With the recent shift economically, more employers are starting to get somewhat apprehensive when it comes to wage increases. They’re looking at adding creative solutions on top of wages, especially around incentives like lifestyle accounts – to attract and retain talent without putting additional pressure on compensation. With the economic challenges we’ve begun to see, there’s an opportunity with these accounts to help solve for broader issues.

As a broker, how are these accounts perceived in the market?

There’s a lot of opportunity to drive literacy and engagement when it comes to HSA and FSA accounts, for example. More broadly, lifestyle accounts like commuter will be very important components in terms of employee needs, especially as workforces might move to in-office or hybrid models.

If you’re interested in learning more about this growth opportunity and how to strengthen your broker relationship, please click here to access a recording of the webinar.