Paying agents and brokers who work with the new health insurance exchanges fairly could protect the exchanges against adverse selection, according to C.M. Gallaher, a vice president at America’s Health Insurance Plans.

AHIP, Washington, is one of a number of health insurance groups, health insurers, business groups, provider groups and consumer groups that have submitted comments on draft papers posted by the Exchanges Subgroup at the National Association of Insurance Commissioners (NAIC), Kansas City, Mo.

The Exchanges

The federal Protection and Affordable Care Act (PPACA) is supposed to create the health insurance exchange system in 2014.

Republicans are trying to block implementation of the act.

If the health insurance exchange provision and related provisions take effect as written, the exchanges will help individuals, families and small groups buy commercial health coverage using new system of tax credits. PPACA will require carriers to sell the coverage on a guaranteed-issued basis, without taking health status into account when they are setting prices.

Nonprofit advisors called “Navigators” who receive no compensation from health insurers are supposed to help consumers use the health insurance exchanges.

The authors of the Exchanges Subgroup drafts have dealt with the role of producers and Navigators in an exchange system; strategies for preventing adverse selection; and ideas for financing the exchange.

What Will Producers Do?

Even commenters who are skeptical about agents and brokers, such as the NAIC consumer representatives, say in their letters that they believe producers will continue to play an important role in the health care system.

The consumer representatives are professors, patient advocacy group representatives and others who receive funding from the NAIC to represent consumer interests in NAIC proceedings.

“Producers will continue to play a role in assisting small employers and their employees navigate the exchange and will continue to offer their services in the nongroup market as well,” the consumer reps say.

Similarly, a group of progressive group commenters led by Cheryl Fish-Parcham of Families USA, Boston, says, “We agre that producers will play a crucial role in the success or failure of an exchange.”

But the NAIC consumer reps argued that the new Navigators need not be health insurance

agents because they will simply give consumers information about the health plans sold through the exchanges. Because of PPACA changes, consumers will not need help with complicated underwriting problems and likely will face fewer problems with claim denials and benefit exclusions, the consumer reps say.

“However, they will need help understanding plan quality ratings, the meaning of satisfaction surveys, and the value offered by different plan tiers,” the consumer reps say.

Low-income people, people with disabilities, people with chronic health problems, and other people who have been outside the commercial health insurance system in most states may need extra help understanding the new system, and the Navigators who serve them may have to be more like the counselors who now serve Medicaid enrollees than like commercial health insurance agents and brokers, the consumer reps say.

Producers As Risk Managers

At AHIP, Gallaher says producers will play an important role in guarding against adverse selection.

Producers who want to work with the exchanges can help them attract a large, diverse pool of insureds who will be similar to the insureds who buy coverage outside the exchange system, Gallaher says.

“Exchanges will need to be an attractive option to consumers and producers to be successful,” Gallaher says. “Producers will be encouraged to work with exchanges when they see a level playing field in compensation and opportunity. Compensation bias may occur if exchanges begin setting limits on opportunities for producers.”

Setting compensation for programs sold through the exchanges too low would cause producers to focus on non-exchange programs and could hurt efforts to develop a diverse risk pool, Gallaher says.

In some cases, Gallaher says, producers could still be the agents of insurance companies; in others, she says, they could act as agents of an exchange and serve as Navigators.

In either case, producers should meet state producer licensing requirements, Gallaher says.

In general, commenters who favor letting agents and brokers be Navigators say Navigators ought to have errors and omissions (E&O) insurance.

Commenters who do not think Navigators should necessarily be producers, or are leery of traditional producers serving as Navigators, say Navigators should have professional liability insurance rather than E&O coverage.

Other health insurance exchange coverage from National Underwriter Life & Health: