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March 06, 2015 at 11:39 AM
Distributing health insurance leads to daunting mountains of work, and even the successful, transparent state-based exchanges seem to be struggling to keep out from under the mountains.
Growing awareness of the challenges is showing up in documents on the websites of Connect for Health Colorado and Covered California — state-based exchanges that post comprehensive board meeting packets on the Web.
As early as the mid-1990s, private Web-based health insurance brokers were hoping that they could sharply reduce health coverage distribution costs by selling the product through the Web, without much spending on live human beings. Most of the early private Web-based health insurance brokers eventually set up call centers and teamed up with traditional brokers. Many eventually presented themselves more as organizations that fed leads to live human sales representatives than as Web-based insurance sales systems.
The state-based Patient Protection and Affordable Care Act (PPACA) exchanges may be facing pressure to follow that same route.
Originally, many PPACA exchange builders seemed to assume that live humans would simply help uninsured people learn about how health insurance works, and that most consumers would then apply for coverage on their own, through inexpensive-to-set-up, easy-to-use enrollment sites. In Vermont, for example, the exchange suggested in 2013 that its brokers would get $180 per consumer enrolled in 2014, and $120 per consumer enrolled in 2015.
Health policy groups that supported PPACA seemed to see eliminating agent compensation as a quick, easy way to cut health insurance costs.
Reality has turned out differently.
Managers of the Colorado exchange talk about sales and servicing problems in a set of February operations committee meeting minutes and slidedeck on options for managing operating costs.
California business groups that strongly support the PPACA exchange concept hint at the distribution challenges facing Covered California in a letter included in a packet of letters sent to the Covered California board.
For a peek at what’s in the packets, read on.
1. This year, consumers have been much more likely to enroll in exchange plans using some kind of live human.
In Colorado, as of Jan. 31, 2015, the percentage of exchange plan enrollments coming through agents and brokers has increased to 37 percent for the 2015 coverage year, from 31 percent for 2014.
Commercial brokers may be crowding out Colorado’s nonprofit “health care guides.” The health care guides had enrolled only 6,758 people in exchange plans during the first 10 weeks of the enrollment period, down from 9,817 for the 2014 enrollment period.
