Some of the producers who traveled here for the National Association of Health Underwriters annual convention complained bitterly about insurers’ lack of interest in small employers.
“If we don’t serve those clients, the federal government is standing in the [wings], waiting to come and fill that void,” warned Michael Matznick, NAHU’s outgoing president.
But Matznick and other speakers said carriers are cold to small employers partly because federal and state efforts to reform the small group market have backfired.
“We need to address the real issue,” said John Nelson, a past president of NAHU’s California chapter. Carriers “aren’t making money with small groups.”
Meanwhile, many NAHU members continue to earn a good living.
Health insurance agents who have solid agencies can still sell the agencies for about 120% to 150% of revenue, according to Dwight Mazzone, chair of HUPAC, NAHU’s political action committee.
Mazzone said he recently received offers from four potential buyers when he sold an agency of his own in Tempe, Ariz.
NAHU lobbyists in Minneapolis were busy working the phones to keep the Senate from passing a version of a managed care bill that could, according to NAHU lobbyists, turn sponsors of employee health plans into easy targets for liability lawsuits.
The Senate was working to amend the bill to reduce employers’ exposure, but NAHU staffers said the remaining provisions would still increase health coverage costs by exposing managed care companies and health insurance agents to lawsuits.
Meanwhile, in some states, a combination of state laws, state regulations and the federal Health Insurance Portability and Accountability Act of 1996 limits insurers’ ability to charge high enough rates to earn a profit on insuring employee groups with two to 50 covered members.
Groups with 25 or more lives are often profitable, but “micro groups” with a handful of members often have high claims rates, NAHU members said.
In some cases, members reported, agents try to defraud carriers by packaging uninsurable individuals in micro groups.
Agents have been debating on NAHU’s message boards about whether NAHU should fight carriers that violate the small group rules, or whether NAHU should stay quiet to avoid scaring more carriers out of the small group market, Nelson said.
NAHU has responded to that division of opinion by tackling the small group issue on a state-by-state basis, Matznick said.
In some states, Matznick said, agents ask NAHU to step in to protect carriers that obey the small group rules from those that don’t.
In states where agents worry more about keeping carriers in the market than compliance with the small group rules, NAHU holds back, Matznick says.
Matznick acknowledged that some of NAHU’s own members may follow the carriers out of the small group major medical market.
“Many of you will be changing the focus of your businesses over the next few years,” Matznick predicted. “NAHU needs to open its focus to serve those who have made these choices.”
Bynum Tuttle Jr., NAHU’s new president, has appointed advisory panels to find ways to appeal to members who sell products other than major medical insurance.
“There are many other health products that we are not addressing to the degree that we could,” Tuttle said.
The NAHU advisory panels are looking at Medicare supplement insurance, disability insurance, long-term care insurance, dental insurance, self-funded health plans, and worksite marketing programs.
But Nelson emphasized the need to solve the small group major medical problems to keep the markets for the other employee benefits and insurance products alive.
When major medical coverage costs too much, “the first thing to go is long-term care, dental, and everything else,” Nelson said.
NAHU itself has made great strides since the mid-1990s, when budget shortfalls forced it to raid its lobbying fund to cover operating expenses.
The Arlington, Va., trade group’s membership has increased 26% since 1996, to 17,100, and its annual budget has increased 23%, to $1.2 million, according to Kevin Corcoran, NAHU’s executive vice president.
The legislative affairs budget has increased 58%, to $1.2 million.
Even aides to lawmakers such as Sen. Hilary Clinton, D-N.Y., who disagree with NAHU on key issues, are eager to meet with NAHU’s members and staff members, according to Thomas Bruderle, a NAHU lobbyist.
“The reception has been very warm,” Bruderle said.
Reproduced from National Underwriter Life & Health/Financial Services Edition, July 6, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.