A Look to the Future: Why Exchanges Need Agents

Between now and Jan. 1, 2014, we can expect to see legislation establishing state-specific health insurance exchanges passed and signed by governors across the country. (In some states, this has happened already.) We will see the appointment of exchange boards, the selection of exchange vendors and the development of exchange IT systems. And with open enrollment for exchanges beginning in September 2013, brokers don’t have a moment to lose if they are to establish themselves as a key ingredient in helping individuals and families and employers make the best health insurance choices.

While exchanges will sell both directly and through a network of still-to-be defined “navigators,” educated, trusted brokers will provide employers and individuals with the most balanced information and unbiased recommendations needed to make the right decisions. In fact, brokers will be needed more than ever to help service routine questions and serious policy issues as purchasers work to become educated on what exchanges are all about.

What is a health insurance exchange?

Exchanges are one of the many tools the federal government is implementing in an attempt to reduce the number of uninsured Americans – currently more than 45 million. Buyers in an exchange can compare plans, costs and benefit options side-by-side and then select the one that best meets their needs and budget. In this way, exchanges have the potential to lower a state’s uninsured rate, help more residents access available federal subsidies and empower consumers to make the right choices for themselves and their families.

But it’s not as simple as it may appear. To be self-sustaining, state health insurance exchanges must be as welcoming to the insured as they are to the uninsured. They must also appeal to individuals and small groups who do not qualify for new subsidies or tax credits, as they most certainly will to those who qualify for these incentives. Only by being inclusive to all individuals can an exchange attract the type of balanced enrollment necessary to be a meaningful force in the market.

This is where brokers come in.

Brokers already have established relationships in the market and know how to attract a wide range of clients. By leveraging existing sales and enrollment channels to their fullest, public and private exchanges can achieve the goals set out in health care reform. And, by working closely with a broker, employers can find ways to save money and still make health care affordable to their employees, regardless of budget restrictions or workforce size.

The need for exchanges

With health insurance premiums continually rising, small business owners are looking to health insurance exchanges as a sensible path to value-based purchasing. As evidence, a survey released earlier this year by the not-for-profit Pacific Community Ventures revealed that 55 percent of small business owners in California said that they would participate in an exchange once they were provided with basic information about how exchanges function. (The survey also disclosed that nearly two-thirds of survey respondents had not heard of health insurance exchanges). On a broader scale, after learning of the tax credits contained in the reform plan, 43 percent said they would offer insurance to their employees. Forty-eight percent, however, said they had been unaware of such incentives.

What we are seeing in California is indicative of the rest of the nation. Clearly, there is work to be done in educating the market. With state-run exchanges just around the corner, brokers must become true experts in how exchanges work and how they can bring added value to the marketplace. This means that brokers should begin to broaden their knowledge of exchanges now. And, in every renewal and new business presentation, they should begin educating their clients about the many benefits that health insurance exchanges can bring. That includes sharing what an exchange is, what exchanges may mean for the client and how privately-run exchanges can provide value to employers and members.

Health insurance exchanges make good sense because they promote choice and make the purchasing process more value-based. But, as the law is currently written, it contains very weak penalties for employers who choose not to participate, causing pundits to predict that some employers may accept the penalties rather than provide coverage for their employees. Here, too, brokers must initiate an aggressive outreach effort to inform employers of this new option and explain its many true benefits.