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.
“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.
Before PPACA came along, medical underwriting shut out about 20 percent of the consumers who entered HealthMarkets’ major medical sales pipeline. Because of the PPACA ban on use of personal health information in decisions about issuing coverage, and the ban on use of personal health information other than age and tobacco use on coverage pricing, HealthMarkets no longer has to worry about losing a sale due to medical underwriting, Fasola said.
But HealthMarkets finds that many of the consumers who call its call centers are actually eligible for Medicaid, not for commissionable commercial health insurance products, and having prospects fall out of the pipeline due to Medicaid has created a new type of barrier to sales, Fasola said.
2. When Uncle Sam puts on his sales guy hat, he focuses too much on price.
Fasola says he sees the PPACA exchange system focusing too much on selling consumers the QHP with the lowest possible monthly premium, and not enough on making sure consumers have coverage that suits their needs.
“The government is pushing people to shop on price, price, price,” Fasola said.
The exchange QHP issuers seem to be delivering the benefits they promised to provide, but many consumers who call HealthMarkets say they did not really understand how their 2014 QHPs would work when they bought the QHPs, Fasola said.
Fasola said HealthMarkets has its agents and call center reps ask consumers about their provider network needs. Agents and reps are supposed to make sure consumers understand the implications of choosing a plan that makes them change doctors, makes them change to a doctor who’s far away, puts their favorite hospital out of network, or offers no provider access at all for children who are away at college.
“The lowest-priced product is not always the best available option,” Fasola said.
3. QHP subsidy buyers can be solid middle-market product customers.
One broker concern about getting involved with the PPACA exchange system has been the possibility that exchange QHP customers would be poor prospects for cross-selling, or that government restrictions would make cross-selling impossible.
Cross-selling has been much easier in the PPACA exchange market than it has been in the Medicare Advantage market, Fasola said.
HealthMarkets was selling an average of about 2.5 other products, such as dental insurance, vision insurance, critical illness insurance or life insurance, to major medical customers under age 65 before PPACA along, and it has been continuing to sell about that many additional products to non-Medicare major medical customers since the PPACA exchange system came to life, Fasola said.
Consumers who are coming out of group plans often want dental and vision benefits, and even customers who are getting the PPACA premium subsidies are interested in products that can help them with high PPACA plan out-of-pocket costs, Fasola said.