A few years ago, managers of some state-based exchanges seemed to think of health insurance agents and brokers as ants to be squashed, or, possibly, starved to death.
The U.S. Department of Health and Human Services (HHS) and its Patient Protection and Affordable Care Act (PPACA) implementation arm — the Centers for Medicare & Medicaid Services (CMS) — were more polite, and sometimes talked about how much the exchange system would need help from brokers. But B. Ronnell Nolan, president of Health Agents for America, couldn’t even get CMS to send agents the same newsletter they were sending to nonprofit exchange helpers, let alone communicate regularly with agents through some other channel.
Ken Fasola, the president of HealthMarkets, an insurance company and insurance distributor with a network of 3,000 agents and 600 call center reps, says exchange managers’ understanding of what licensed agents and brokers do and know seems to have increased significantly since the first PPACA exchange system open enrollment period started Oct. 1, 2013.
HealthMarkets is a major Web broker entity, and Fasola says there is no way the nonprofit exchange helpers can compete with his people’s knowledge and experience at helping buyers of individual and family health coverage.
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“We’re going to be around,” Fasola said in a telephone interview.
To learn more about how Fasola sees health insurance distribution evolving, read on.
1. The effects of the new programs and rules on revenue are complicated.
Some LifeHealthPro.com readers have complained when LifeHealthPro.com covered the effects of PPACA and other health insurance market trends on broker compensation, because they argued that coverage of broker comp gave the impression that many brokers opposed PPACA mainly because of how they felt PPACA would affect their own revenue, rather than their sincere beliefs about what PPACA might do to the customers.
But sharp broker compensation cuts did materialize soon after PPACA came along.
In 2011, HealthMarkets saw insurers adopt reimbursement changes that amounted to a 42 percent drop in commission levels.
In 2012, compensation changes cut commission levels another 12 percent.
Other factors have helped increase revenue, and the share of revenue a broker can keep, Fasola said.
The average HealthMarkets major medical customers who are under the age of 65 are now getting coverage that costs a total of $5,500 per year. That’s up from an average of $3,600 per year before PPACA came along. The increase is hard on the customers, but it’s good for broker compensation, Fasola said.