WASHINGTON BUREAU — The role that insurance agents play in the health insurance marketplace in 2014 and beyond will likely be left up to the states, according to Joel Ario, head of the insurance exchange bureau at the U.S. Department of Health and Human Services (HHS).
Ario said states will also have flexibility in determining the role of agents in a new “Navigator” system that is supposed to help consumers and small businesses use the new health insurance exchange distribution system that is supposed to be created by the Affordable Care Act, the legislative package that includes the Patient Protection and Affordable Care Act (PPACA).
PPACA opponents are trying to repeal the law, change it or block implementation.
If the exchanges provisions take effect as written, the exchanges are supposed to distribute subsidized health coverage to eligible individuals and small businesses starting in 2014.
A state can run its own exchange program, participate in multi-state exchange programs, or let HHS provide exchange services for its residents.
Ario talked about the role of agents here at a conference organized by the National Association of Health Underwriters (NAHU), Arlington, Va.’
HHS would prefer to see states manage the exchanges, and the federal government will step in “only if there is no alternative,” Ario said.
Some agents fear that the government could use the Navigator system to shut agents out of the health insurance system.
Each state will be able to define its own exchange “Navigator” program, and each state likely will have the authority to decide whether its navigators must be licensed insurance producers, Ario said.
“The intent of the Navigators is not to replace agents,” Ario said, but to reach out to “hard-to-reach populations not currently served by agents.”
This market segment includes the “less affluent who are going to get coverage through the exchanges,” Ario said. “I don’t see a conflict between the agents and the Navigators.”
States will have to figure out the role of brokers in the individual market and state exchanges, but brokers are almost sure to have a presence in the exchange programs set up to serve small businesses, Ario said.
There is widespread agreement that “if it’s going to work, the agents have to be part of the process,” Ario said.
HHS plans to release the first round of exchange-related regulations in late spring and a second round in the fall, Ario said.
In later comments, Susan Voss, the Iowa insurance commissioner, seem to imply that the states also expect agents to have a strong role in the exchange programs.
She did so by strongly endorsing agent involvement in marketing of all health insurance products, noting that state insurance departments “just don’t have the people to serve the consumer they way the agents do today.”
State insurance officials understand that an insurance policy is an intricate product that is not easily understood by the consumer, and that the agent’s role is critical to having the consumer understand the available choices, Voss said.
Another contentious PPACA provision, the medical loss ratio (MLR) provision,
now requires insurers to spend 85% of large group revenue and 80% of individual and small group revenue on medical care and quality improvement efforts.
Insurance agents and brokers have argued that producer commissions should be left out of MLR calculations.
Customers are the ones who really pay the commissions, and insurers collect the commissions as a convenience to customers, producers say.
Voss said she believes that agent commissions should be included in the amount of premiums reserved for medical expenses.
Commissions on sales of health insurance policies “don’t go to the bottom line” of health insurers, but instead are fees paid by health insurers only to reimburse agents for the services they provide, Voss said.
Rep. Mike Rogers, R-Mich., is expected to introduce a bill exempting producer commissions from MLR calculations with bipartisan support in coming weeks. Rogers talked about his work on the MLR issue at the closing session of the NAHU conference.
Mel Schlesinger, incoming NAHU president and an independent agent in Winston-Salem, N.C., said he took Ario’s remarks to indicate that HHS “is pretty open” to hearing what everyone’s views are and is also seeking to be “fair and impartial” in decisions regarding the future health insurance market.
Today, “there are strong incentives for agents to go after the underserved population,” Schlesinger said.”
In the past, agents did not seek out the low-income and moderate-income uninsured, because they could not afford coverage, Schlesinger said.
In the future, “if there are going to Navigators, they still need to be licensed insurance agents,” Schlesinger said. “Even if the Navigators are accessed through call centers, they should be licensed agents. If they are going to make recommendations to consumers, if they are going to understand the industry, why shouldn’t they be licensed?”
WHO CAN GET THE SUBSIDIES?
Rep. Rob Andrews, D-N.J., a senior Democratic member of the House Energy and the Workforce Committee, said he would support a PPACA amendment clarifying that subsidies could be provided to consumers who qualified for the subsidies whether or not the consumers bought insurance “inside or outside the exchanges.”
MEDICARE ADVANTAGE CUTS
Congressional Democrats have argued that enrollees in traditional Medicare are subsidizing enrollees in the Medicare Advantage program, which gives private insurers a chance to provide Medicare coverage.
To pay for Medicaid expansion, coverage subisidies and other PPACA provisions, Democrats put provisions in PPACA that could cut Medicare Advantage funding.
Medicare Advantage program defenders argue that the Medicare Advantage plans provide better, broader coverage and appear to be helping enrollees live healthier lives.
Andrews said at the NAHU conference that he could support adding money back to the Medicare Advantage program if carriers could prove they were providing additional services not currently available through fee-for-service Medicare program.