PPACA and Broker Relevance - Your Thoughts?

[Twitch]

I started out in this business five years ago as a health insurance specialist. Since that time, I've seen my commissions cut in half. PPACA adds a new layer of concern. I feel that healthcare insurers being put in the same room to discuss the creation of exchanges placed healthcare brokers in danger of extinction - that collaboration to create standardized products, in my opinion, lent itself heavily to an environment where choice in healthcare insurance would be dumbed down and brokers would be marginalized and bypassed in distribution. HR 1206, which would take agent and broker commissions out of the MLR requirement, is unlikely to pass (govtrack.us gives it a 21 percent chance of passing at last look).

So we are, in effect, becoming as relevant as hiring a gas station attendant to help choose between four gasoline blends at the pump.

Do you see this? What changes do you guys see in the supplemental and voluntary market with ACA?

 

[somarco]

Going forward, once (if) the exchanges are established and funded (for subsidies) brokers will play a smaller part in the equation. As GI and all the other constraints of Obamacare become reality, most states will have 2 - 3 carriers in play for major med and I really don't see small group (under 50 lives) existing if the exchanges and subsidies become a reality.

Supplemental plans marketed via payroll deduction will have some relevance, especially if the employer establishes an HRA to provide premium assistance.

 

[russelltw]

The question will be outside the exchanges. Will we be able to sell and more importantly, will the client be able to afford the plans outside the exchange without a subsidy?

One of my carriers has said that many of the people we write currently would not qualify for the subsidy. They feel like the subsidy will open up a new area that they have not been able to reach. Whether that is good or bad is yet to be decided.

The same carrier is concerned about what happens after (2016 or 2018) when the government stops reimbursing for losses form claims. At that point, carriers will have to stand on their own....

 

[taterpeeler]

ok. lets look at the other side of this. how many of you sell medicare advantage plans? if you do why are you needed/ they all operate under the same basic actualary value. they are all the same... hmo, ppo... all the same for the most part, right? then why are you still needed? why are you still getting close to 420 per new sale per head and half of that for renewals.....

you answer that question above and then you have addressed your concerns

 

[Twitch]

The same carrier is concerned about what happens after (2016 or 2018) when the government stops reimbursing for losses form claims. At that point, carriers will have to stand on their own....

I agree, which places even more pressure on the carrier to eliminate the broker from the MLR equation in short order. By that time, their distribution channels will have evolved to the point where platinum/gold/silver/bronze choices should be a web click away, and for that decreasing number not comfortable with the Web, there's direct mail. Don't believe for a second that all the major insurers aren't simplifying their offerings and testing Internet sales portals, even as some of the same ones are stringing us along with promises of better commissions and continued relationships.

If health insurance becomes commodotized, agents and brokers have no place in the distribution model. None. We are simply a necessary evil for a couple more years until the transition is complete.
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ok. lets look at the other side of this. how many of you sell medicare advantage plans? if you do why are you needed/ they all operate under the same basic actualary value. they are all the same... hmo, ppo... all the same for the most part, right? then why are you still needed? why are you still getting close to 420 per new sale per head and half of that for renewals.....

you answer that question above and then you have addressed your concerns

You are aware that health insurance companies are paid over $700 per month, and depending on location and star rating, sometimes over $1000 per month for each Medicare beneficiary outsourcing their Medicare benefits to an Advantage plan, yes?

 

[taterpeeler]

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You are aware that health insurance companies are paid over $700 per month, and depending on location and star rating, sometimes over $1000 per month for each Medicare beneficiary outsourcing their Medicare benefits to an Advantage plan, yes?

ahh... yes I am.... point please?

 

[somarco]

what happens after (2016 or 2018) when the government stops reimbursing for losses form claims.

I really don't think the carrier reinsurance program is going to work that well. Seems to me it will be underfunded, especially if there is pressure on the carriers to hold rates and adhere to MLR rules.

pressure on the carrier to eliminate the broker from the MLR equation

The broker is not the problem.

Eliminating the broker does not mean there are $0 acquisition costs, they are merely shifted. Currently HO direct generated business stays on the books 5 - 6 months. I doubt that will change much post 2014.

Carrier direct business has higher overall acquisition costs and I really don't see that changing under Obamacare.

 

[SamIam]

Going forward, once (if) the exchanges are established and funded (for subsidies) brokers will play a smaller part in the equation. As GI and all the other constraints of Obamacare become reality, most states will have 2 - 3 carriers in play for major med and I really don't see small group (under 50 lives) existing if the exchanges and subsidies become a reality.

Supplemental plans marketed via payroll deduction will have some relevance, especially if the employer establishes an HRA to provide premium assistance.

Why would employers under 50 set up a HRA if their going to dump them on the exchange. They will be done with Health insurance all together. Correct or not?

 

[Dave020]

At least in CA carrier-direct sales for exchange plans are highly compromised.

Agents (including carrier direct) must present all carrier plans in a tier equally, fairly and balanced. No carrier will pay their direct sales staff to sell a competitors product, which would happen frequently. And no carrier is going to train their in-house agents to sell for the competition as well as their own plans.

Outside of the exchange I assume any carrier can push their own product. Inside, it is prohibited. The HBEX has even gone into consideration of monitoring all "web based agencies" to ensure that they don't use algorithms in their quote engines to promote any specific carrier or plan.

 

[taterpeeler]

At least in CA carrier-direct sales for exchange plans are highly compromised.

Agents (including carrier direct) must present all carrier plans in a tier equally, fairly and balanced. No carrier will pay their direct sales staff to sell a competitors product, which would happen frequently. And no carrier is going to train their in-house agents to sell for the competition as well as their own plans.

Outside of the exchange I assume any carrier can push their own product. Inside, it is prohibited. The HBEX has even gone into consideration of monitoring all "web based agencies" to ensure that they don't use algorithms in their quote engines to promote any specific carrier or plan.

and that right there is great news