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What's Going on With Agents and the Exchanges?

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When the PPACA was first announced, the state health insurance exchanges created a slight panic to some agents. The calls came into our office, emails flooded our inbox, all with five little words; “What will my role be?”

We quickly worked to find the answer. Editor Christina Pellett asked Jessica Waltman, senior vice president of government affairs at the National Association of Health Underwriters, specifically about how the PPACA will affect health insurance agents. Waltman assured readers not to throw in the towel, that everything would be fine, and that agents would still have a role in the new exchanges.

However, a recent statement from the National Association of Insurance Commissioners (NAIC) implies that agents do have a reason to worry. Timothy Jost and Stephen Finan represent consumers in NAIC proceedings. They say that the cost of exchanges may amount to 3 percent or 4 percent of total coverage costs.

The exchanges “must reduce costs elsewhere for employers and insurers if they are to compete with the non-exchange market,” Jost and Finan say. “An important issue here may be brokers’ commissions, as the role of brokers will certainly change with the coming of the exchanges and brokers will probably play a diminished role in the individual market. This will undoubtedly be a contentious issue in many states, but restructuring costs and overhead in the system to meet the needs of the exchanges is critical to ensuring the exchanges’ success.”

So what’s going on here? If agents are going to be needed in the exchanges, as Waltman suggests, then will it be at reduced commission levels? Or will the exchanges find another area of the budget to trim?

The exchanges don’t officially go into effect until 2014, so we may have to wait some time before we get a real answer to this question. But until then, health insurance agents may want to consider getting involved in other product sales. Don’t think of it as throwing in the towel – think of it as preparing for the worst. And if nothing happens with the exchanges, then you’ve still come out on top.


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