Back in Business

J The election results mean nothing. Now the real work begins. We can only wait and see if our elected officials truly represent the electorate or only go to Washington, DC or the 50 statehouses and play political games.

Mark Sommerville

Editor’s Note: The following letter references p.27 of the 11/8 issue, which included an editorial cartoon on the GOP midterm victories, including a quote from Washington Examiner columnist Hugh Hewitt that called Nancy Pelosi and President Obama “the most spectacularly failed partnership in modern American political history.”

J this ignorant jerk [Hugh Hewitt]has no place being quoted with his biased and inflammatory rhetoric in what is supposed to be a reputable insurance magazine. The ridiculous accompanying cartoon just underlines the fact that we have just witnessed an “auction” not an election on November 2. Our country is being sold off to the highest bidder – especially the secretive National Chamber of Commerce and the “Supreme” Court. The “Golden Rule” perverted: Those who have the gold make the rules. Far better to express intelligent truthful statements than to rant, lie, kill, cheat and defame the character of honest, hard-working people and politicians. As Daniel Patrick Moynihan once said, “Everyone is entitled to their own opinion. No one is entitled to their own facts.” Or in Hugh Hewitt’s case, projecting the fantasy he hopes will come true. President Obama already accomplished enormous changes despite what Hewitt rants about and the tea party has ignored. Things have to change even in the face of hate and lies. We can all participate to help it happen – the audacity of hope! There are enormous resources and talents to keep people on the side of truth and stability, despite what seems to be huge pockets of money to buy the power and continue to corrupt the political system. We are way overdue for constructive conversation and effective changes for all people of this great country.

Ray Quinn

Commissions Stay
in MLR Blank

J for agent commissions to stay in MLR blank means the agent commission will be part of the 80% and 85% MLR administrative cost total. I don’t understand that. I thought the NAIC represented the interests of the agents? Making their commission be part of the MLR maximums means their commissions will be cut severely or eliminated entirely. That doesn’t sound like they are looking out for our best interests.
David Krueger

J As an independent insurance agent for over 20 years, I love what I do and I have three employees to pay. Our clients value our advice because we are educated and look after their needs, and don’t just chase the highest commission. If we did that folks would figure that out pretty quick and go somewhere else. That being said, we have to be compensated fairly for our work. We only get paid if someone is accepted for coverage, not if they are turned down so often we work for free. I guess if this holds we will be laying some people off. We have already started to diversify. I just feel bad for the people that work for me. I can’t wait too much longer for clarification because if this all goes the way it seems to be going, then I need to change things starting yesterday. I have kids in college and bills to pay.
Sandy –

J If agent commissions are cut based on the 80% and 85% MLR admin total and carriers lower commissions, what agents will be selling insurance anymore? There have been talks that if this happens, agents could see a 75% cut in the individual health commissions. Not having local agents to help with health insurance purchasing decisions will be a detriment to the consumers. No agents means no sales for the carriers so they will end up closing their doors. Less choice means higher rates, which is just what this administration wants… to end up with a single payer system. The consumers are the ones that will suffer. How would these HHS reps like to see their pay cut 75%?
Jeff –

J In previous articles it was stated that agents’ average commission is 20% of the premium. This is incorrect. The commission we receive for is 5% new and renewal for group plans and 20% first year only for individual plans. While there are bonus programs for production, most agents make 5% on group medical plans and less on large group and self-funded plans. For instance, if your group-monthly premium for 10-12 employees is $5,000 a mount we make $250 to pay our overhead and squeeze out a profit after taxes. To make a above average income you have to have 100-150 clients that you service each week and month so you can keep their business. Independent broker/agents threaten the politicians and regulators because we still tell the truth to our clients and real effects of the federal legislation upon our clients and employees. Sometimes we even have to educate the employees of insurance companies to take proper and expedient action in favor of our clients. Without these services, the consumer is at the mercy of someone on the phone that could care less of the services provided or proper advice given. For the NAIC and federal government to legislate us out of business is evidence of another attack of our representatives upon its citizens whom they have sworn to protect.
JG Sidwell

J Since the insurance companies won’t be compensating agents, will this effectively mean that the government will be subsidizing the health insurance industries’ expenses with taxpayer money? The insurance industry will no longer have to pay agents or deal with them advocating for their customers, or showing them the most effective and appropriate ways to manage their risks. Once this function is relegated to the civil service, do you think the same agents (turned government employees) will continue to work just as hard for their customers, be just as creative, and have the same sense of eye to eye accountability? Will customers of the exchange tell their neighbors and friends on Facebook, “Oh, you just have to ask for agent #6565792 in the St. Louis office, she is the best, she will take care of you!” And if not, where will agent #6565792′s pride in craft come from? Will agent #6565792′s coworker in the next florescent-bathed cubicle lean over to say, “Wow, you really know how to take care of people?”
Robert Anderson

J History will repeat itself. It has already been proven that agents are a key part of market penetration, and an electronic enrollment process is not accepted by a large portion of the potential insured base. A lack of involvement has major programs go under-utilized. Massachusetts has 20%+ of children who are eligible not being enrolled in Children Health Programs. Nevada is at over 50%, in large part because the agent is not involved due to lack of incentive. Would anyone on the committee be working on the committee if they were not being paid to?
John Spek

J The independent insurance broker distribution channel is by far the least expensive way for insurance companies to market their products. Insurance companies cannot hire employees to do what we do for anywhere near what they pay us. For me to stay in business, I must make a fair profit. Cut my commissions too much, I’ll find another way to make a living.
David Blancett

J People have no idea how much time we spend with clients. Some require more time than others, but we need that to be able to run our offices, pay our E&O insurance, etc. We have a 50-year old agency started by my father, that I took over on his death and have a 35-year old daughter as another agent. We’re afraid of our future in this industry.
Susan Scott

J I have been an agent for 26 years and group/individual health represents 55% of my income. If things are not repealed by Congress I expect to not have an individual carrier left in my state (Oklahoma). All of the child-only plans are gone as of 9/23, and I assume most other states have seen the same exit of carriers. When guaranteed issue for all comes around in 2014, the end will be near. I do not see my agency continuing to write individual health at 3% to 5% commissions. The Blues have gone to an 8% first year and 5% renewals already for 1/1/11 from 15% & 7.5%. Encourage your book to stay put and not make changes to avoid being non-grandfather, they will have lower rates and you should make more on the old book. Diversification is going to be the key to survival, I love writing health insurance and cannot see the average employer or individual working through the system without help from someone like me, but the Obama plan is to nationalize the industry and he is actually doing it.
John Murphy

There is Still Hope
for Health Reform

J I CONTINUE to marvel at the
ongoing challenges the policymakers identify when there are some rather fundamental, albeit extremely hard to tackle, issues that we must acknowledge: First, the Baby Boom generation is a tidal wave of claims that will inevitably increase claims and cost. Second, individuals taking responsibility for their well-being (on obesity, smoking, exercise, etc.) is crucial to the management of health and the possibility of controlling costs. Third, since the current health care delivery system is flawed, since doctors are able to compete with hospitals for profitable services(outpatient surgery and diagnostics) thereby creating unnecessary duplication and added cost. Until all hospitals and doctors are vertically aligned, this issue will remain a constant. I could continue with other thoughts, but these three are in my mind central to the current debate and unfortunately, they are not on anyone’s radar screen.
Tom Barone

J I am amazed that everyone is required to have liability insurance on our cars to cover damage to the other vehicle and its passengers. Jail time, fines and drivers license suspension are options if no insurance. Where are our priorities? People that cause a car wreck get more punishment than do most doctors or medical care professionals get for medical errors. If you have to get a car repaired and it is not done right then you can take it back and they will make it right at no charge. If you make a mistake in medical treatment and go back to the same doctor or another medical provider you pay again (unless the medical error causes death). We are not worried that our car may die due to a repair yet we have more options to get it corrected than we do with medical errors.
Tommy A. Tillery

National Underwriter welcomes your responses. Please e-mail your letters to bcoffin@nuco.com or mail them to 33-41 Newark Street, Hoboken, NJ 07030. Also, please post on any and all online stories and blog posts that we publish. Be heard!