FYI: THIS ARTICLE WAS BANNED FROM PUBLICATION BY NAHU.
When the founders of NAHU began our association in September of 1942, they made a pretty clear statement defining the purpose and value of membership in our association. Take this snippet from the original Articles of Incorporation of the association: “To sponsor and promote…all such measures, activities, and legislation…to further the interests of health insurance policyholders…and of those engaged in the health insurance business, and in particular…to cultivate, and promote…closer cooperation among all agents and companies engaged in the health insurance business.” Sounds pretty great, right?
They knew that the nature of our business would mean that carriers and agents would need to mutually respect each other, and that free markets would allow for fair competition among carriers for the agent’s business, and vice versa. NAHU would be a place where agents established their credibility and clout for our fine programs, but the carriers knew that we represented the agent and other organizations represented the interests of the carrier community.
In the late 1950’s and 60’s, government became another player in the health insurance business. NAHU’s leadership worked diligently against “socialized medicine” in the form of what we now know as Medicare and Medicaid. They fought the good fight; they took their message to Washington and they did all they could to block these laws warning of enormous cost overruns. They were correct, and they lost the fight, but at least they stood their ground and adapted to the new realities.
Okay, enough history. Fast forward to the 21st century and there are some facts that are perfectly clear. Fact: Agents and brokers are working harder and making less than ever before for the consumer and business services they provide. Fact: More agents are leaving the business than ever before because they simply cannot make a viable living in the new climate. Fact: Carriers are the recipients of enormous new revenue thanks to PPACA, much of that new business generated by agents and brokers.
Still, all over the nation, carriers are reducing agent compensation to levels that could easily be construed as designed to eliminate the agent from the process. In the first two years of PPACA’s new “private” markets, compensation has been reduced by as much as 70% on average. In many locations and with some carriers, it is worse. No one is taking the fight to the public, the carriers, or the government to support the role of the professional health insurance agent.
While NAHU is supporting a bill in Congress in 2015 to take agent compensation out of the MLR
, a laudable activity worthy of our support, its probably only symbolic as the bill will probably not become law. Who believes that the President will sign such a bill if it gets to his desk? While that process ensues, much of the carrier community is continuing to reduce agent compensation making our viability as business people questionable.
NAHU has not been willing to allow our members to discuss agent compensation in any form based on a highly suspect belief that doing so would violate some form of anti-trust law. It is important to point out that NAHU has never sought, nor received a proper legal opinion about the impact of anti-trust laws on the free speech of our members. As agents and members, we can’t collectively bargain, nor price fix, nor effect the premium costs of the plans we sell; simply, we can’t practically effect any action that could be interpreted as having violated anti-trust laws.
While caution is always in order, NAHU has merely crafted a “cut and paste” legal “opinion” issued to another organization and used it to block the members from “talking” about compensation among ourselves. It’s unfair and intellectually dishonest. A real legal opinion, paid for by NAHU and written specifically for NAHU, needs to be obtained before our association makes important decisions about whether our members enjoy the privilege of free speech.
As I write this article the last week of February 2015, another blow to agent compensation has just happened. Assurant Health, after reducing commissions to historic low levels a month ago, has now decided to eliminate all broker commissions in certain states on many products our members sell. Our sister organization, NAIFA decided to chime in on the subject.
From Diane Boyle of NAIFA: “…Obviously, we’re concerned about agents being fairly compensated and if this decision by a carrier continues, we imagine it probably would spread,” she says. Insurance companies “are trying to figure out how to manage their budgets and if they are having to include agent compensation in the medical loss ratio, it makes it more difficult to continue those payments. To the extent that agents are not adequately compensated, are they going to be able to continue to provide service to consumers? That is incredibly concerning to NAIFA and it’s an issue we continually work on — making sure that agents are fairly compensated in order to ensure that consumers have access to professional advice; Pushing the agent’s assistance out of the picture hurts the consumer in the long run.” says Boyle.
I’m comfortable with that statement being made in the defense of the agent community. NAHU’s response to the issue? Silence. I won’t try to conjecture why NAHU has taken a position of no action on issues of such importance to our members, but this needs to change. NAIFA obviously exercised caution in their statement, but there’s no doubt that the narrative is about commissions. I wonder if they have had a legitimate legal opinion generated to chart their course? My guess is they wouldn't allow such statements to be released unless approved by their legal department.
The various health insurance bulletin boards are buzzing with this information as well, except one. NAHU’s B2B
. Why? Because leadership doesn't trust us to participate in such discussions among ourselves, or to the general public or media. So I have to ask an age old question here at NAHU. Are we an agents’ organization? If we are, to what extent will we go to support our members and their businesses?