Steve Auerbach, the head of a company that supplies the innards of many large health insurance exchanges, says he is hungry for good agents.
Auerbach is president of Connextions Inc., Orlando, Fla., a health insurance technology company that recently was acquired by OptumHealth, which is, in turn, a unit of UnitedHealth Group Inc., Minnetonka, Minn. (NYSE:UNH).
Connextions is already selling systems that many large health carriers use to manage consumer relationships, and it supplies technology and support services used by many existing public and private health insurance exchange programs.
Auerbach – who worked as executive vice president of operations at UnitedHealth before shifting over to Connextions – says blaming the Patient Protection and Affordable Care Act of 2010 (PPACA) for threatening to displace health producers with a new system of health insurance exchanges is probably a mistake.
PPACA opponents are working to get Congress to repeal parts or all of PPACA and they also are trying to persuade the U.S. Supreme Court to overturn the act.
If the act takes effect as written and works as drafters expect, starting in 2014, individual consumers and small groups that qualify for government subsidies are supposed to be able to buy coverage through the exchanges. Some states may be able to let higher-income individuals and small groups that do not qualify for subsidies buy coverage through the exchanges.
Agents and brokers have wondered how they will get paid – and if they can get paid – for helping exchange customers, and whether a new system of “Navigators” that PPACA is supposed to help customers use the complicated new exchange programs – will further erode producers’ position.
Auerbach said he thinks rapid growth in exchanges is inevitable, with or without PPACA.
“It’s clear that the current system is broken and unaffordable and not sustainable,” Auerbach said in an interview.
PPACA is simply speeding up the process that led to the creation of exchanges in Utah and Massachusetts, and the forces that led Florida – a state that is refusing to help implement PPACA – to set about developing its own homegrown, non-PPACA exchange program.
The exchanges will be big enough to wring lower prices for consumers out of the coverage manufacturers – the insurers – just as big-box retailers now wring lower prices out of manufacturers of the consumer goods the big-box retailers sell, Auerbach said.
Health insurance agents and brokers will have to go through a major realignment, but the shift to exchanges will not necessarily be bad for producers who can adapt, Auerbach said.
Buying health insurance is a “high-touch” process, and typical consumers now need about 4 to 5 contacts with a company or distributor before they buy coverage, Auerbach said.
At Connextions, “we’ll be hiring thousands of agents that will work in retail stores” and talk to consumers one on one, Auerbach said.
Connextions also is hiring licensed producers to work in contact centers.
Some producers may become exchange employers, but others likely will continue to be self-employed and work for the exchanges on a contract basis, Auerbach said.
He also expects to see the live humans on the exchanges working more to sell property-casualty insurance and wealth management services.