In October 2010, then-California Gov. Arnold Schwarzenegger authorized the establishment of a state health insurance exchange pursuant to the mandate laid out in PPACA. While California was the first state in the nation to take such action, it certainly won’t be the last – which is why it’s advisable that brokers and agents heed this call and begin to establish themselves as exchange experts.
Health care reform mandates that every state establish a health insurance exchange by Jan. 1, 2014, or default to a federal “fallback” program. Exchanges are designed to promote choice and make health insurance purchases more value-based by allowing an individual or small business to compare the costs and benefits of various health plans and benefit options. The mandate is designed so that, with such information in hand, buyers will be able to better select a health plan that fits their needs and budget.
Exchanges make sense because they create more efficient markets and offer the opportunity to effectively extend coverage to the uninsured. But what do exchanges mean to health insurance agents, and what will they need in order to be successful?
The short answer is that health insurance exchanges signal incredible new opportunities for producers – opportunities for new sales, opportunities for new clients, and opportunities to position themselves as leaders in this new arena. But with these opportunities will come some new challenges.
While state exchanges can use agents, they will in all likelihood also be sold directly through an undefined network of “navigators.” So why would an individual or business owner use a broker when they could go straight to the exchange itself? The answer is exactly the same as to why an employer uses a broker today – because more than anyone else, the broker can provide the unbiased information and superior service purchasers need to make well-informed decisions.
Brokers and agents should not waste any time in familiarizing themselves with exchanges and establishing themselves as the trusted source for all things exchange-related. You can do this by continuing to sell what you think is appropriate while expanding your discussion in every renewal or new business presentation to start talking about exchanges – what they are, what they mean, and how they are currently working in such states as Massachusetts, Utah, and California, where last year, CaliforniaChoice became the first private health insurance exchange in the nation to surpass 20 million member months.
Begin by spotlighting the three main attributes of an exchange:
- They promote choice
- They encourage value-based purchasing
- They move society toward a more rational method of purchasing health coverage.
Explain that the state exchange will include multiple health plans with bronze, silver, gold, and platinum levels – plus a catastrophic plan — so consumers can choose the one that best meets their needs and pocketbook. It’s important to also point out that individuals who can’t afford to purchase a plan through an exchange may be eligible for a subsidy from the government based on income and family size.
In addition to helping your clients understand how exchanges work, the brokers and agents who will be the most successful selling their state exchange are already (or are planning on) working with quoting engine products that allow for full health plan and benefit comparisons, similar to the way that exchanges will represent their options. Quoting engines allow consumers to instantly compare multiple plans, benefits, and prices in ways that make it easier and faster to find the plan that best meets a client’s individual needs. It is also a good idea for brokers to make these types of quoting tools available on their websites.
With any change comes uncertainty, but don’t let that uncertainty inhibit your thinking or discourage your efforts. By showing clients how health insurance exchanges will work in the future, brokers and agents are wonderfully positioned to emerge as winners in this latest chapter in America’s health care system.
Ron Goldstein is president of CHOICE Administrators Exchanges.